Pegging office space investment to high vacancy periods

THE Singapore real estate market has been volatile. Amid the cyclical nature of the market, we looked at data from 2000 to find the best years to buy an office building in Singapore and hold for five years. We found that these periods have generally coincided with periods of high vacancy rates.

In 2001 to 2004 prime office rents fell 42 per cent, before rising 270 per cent in 2005 to 2007, then correcting downwards by 52 per cent in 2008 to 2009. In the last two years, prime office rents fell 18 per cent and JLL expects rents to fall another 10 per cent before recovering in 2017.

Due to the market's cyclical nature, investment in Singapore office assets at the right time can provide rich returns. In 2002 to 2005, an investor who bought an office building and sold it after five years would have made an average annual return of 18 per cent. In 2009 to 1H2010, an investor doing the same would make an average annual return of 11 per cent.