Singapore office rents fall 4.5% in Q3: URA

RENTALS of office space in the central region of Singapore fell 4.5 per cent quarter on quarter in the third quarter of 2020 after remaining flat in the previous quarter.

Demand for office space continued to moderate amid a bleak employment outlook, said CBRE's head of research (South-east Asia) Desmond Sim. "Cost efficiency continued to be the main driver for leasing enquiries as tenants across an array of industries continued to downsize, either through renewals or relocations."

Figures released by the Urban Redevelopment Authority (URA) on Friday also showed that prices of office space in the central region went up 0.2 per cent in Q3 after declining 4.3 per cent in the previous quarter.

This was due to the central area, where prices of office space rose 1 per cent quarter on quarter. Rentals in the fringe eased 4.4 per cent.

There were two record price transactions for the quarter under review, pointed out JLL's head of research and consultancy, Tay Huey Ying. These were the proposed divestment of Robinson Point for S$500 million, and a high-floor strata-titled unit at Suntec Tower 1, which was acquired at S$10.6 million. The former works out to S$3,736 per sq ft of net lettable area (NLA) and the latter, S$3,443 per sq ft of strata area.

Islandwide, as at the end of the third quarter of 2020, there was a total supply of about 767,000 square metres (sq m) gross floor area (GFA) of office space in the pipeline, compared with 668,000 sq m GFA at the end of the previous quarter.

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The amount of occupied office space decreased by 19,000 sq m of net lettable area (NLA) in Q3, versus a bigger drop of 55,000 sq m in Q2. The stock of office space declined by 33,000 sq m NLA in Q3, compared with an increase of 43,000 sq m in the previous quarter. As a result, the islandwide vacancy rate of office space edged down to 12 per cent at the end of Q3, from 12.1 per cent at the end of Q2.