Quick takes: Office property on firm recovery, while retail slump still moderating

Rentals of office space reversed direction and rose 2.4 per cent in the third quarter of 2017, after a 1.1 per cent decline in the previous quarter. Retail rents continued their slump, falling 0.2 per cent in Q3.

Here are some comments from property consultants:

Office

Tay Huey Ying, Head of Research and Consultancy, Singapore, JLL:

"(This ends) nine straight quarters of decline. This reinforced JLL's earlier observation that CBD Grade A office rents are on a firm recovery footing... Rent recovery is believed to be underpinned by improving demand as business sentiment has turned more upbeat on the back of a broadening economic recovery."

Cushman & Wakefield research director Christine Li:

"Although vacancy rate of 13.3 per cent in Q3 2017 is at 12-year high, it came on the back of the 5.4 million sq ft of office space coming on-stream islandwide between 2016 and 2017 alone. Now that the tsunami of office supply has passed, and with rents having fallen to very attractive levels, major occupiers are taking advantage of this market trough to negotiate for early renewals and relocations. Corporate decision-makers are responding to signs of economic improvement and are more forthcoming in terms of corporate expansion."

Retail

Desmond Sim, Senior Director, CBRE Research:

"Latest figures from URA showed that retail rental corrections are easing. URA's retail rental index (Central Region) edged downwards by 0.2 per cent in the third quarter of this year over the preceding quarter, a smaller drop than the 1.2 per cent q-o-q decrease in Q2 2017.. The retail market is finding its footing, especially for the Orchard Road market on the back of improved tourism statistics. However, optimism in the retail market is not broad-based. Weakness still lies in the fringe areas, as well as secondary corridors and floors."

Edmund Tie & Company research head Lee Nai Jia:

"The retail market remains subdued in Q3, even though the decline in rents has moderated. While e-commerce and the accessibility to shopping havens in neighbouring countries continue to affect retailers and the overall retail market, the impact seems contained for now. In fact, we see more online shopping portals adopting the brick and mortar strategy such as Reebonz. Separately, local retailers are engaging consumers via omni-channels. F&B and educational institutions are likely to form the bulk of demand for retail space."