Singapore office market recovery well underway: Colliers
Leasing deals throughout 1Q2022 consisted of style seller Shein using up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical firm BASF will be relocating from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.
In terms of the CBD micro-markets tracked by Colliers, office buildings in the Raffles Place/New Downtown location, as well as the Shenton Way/Tanjong Pagar area, saw the highest possible development in rents, raising 2.3% q-o-q to reach $11.96 psf.
Premium as well as Grade-An office complex in the CBD additionally remained to see solid leasing need, with favorable net absorption of around 134,000 sq ft in 1Q2022. Meanwhile, the vacancy rate tightened to 3.3%.
An office report by Colliers for 1Q2022 shows that the improvement momentum in the Singapore office market is well underway. Premium and also Grade-A workplace rents in the CBD increased for a third consecutive quarter in 1Q2022, raising 1.5% q-o-q to reach $10.26 psf, supported by healthy and balanced renting demand. This marks the fastest speed of growth since rents rebounded in 3Q2021.
Moving forward, Colliers expects office possessions in prime areas to proceed attracting a wide variety of capital, underpinned by a healthy leasing market overview, minimal new supply, and also the reopening of Singapore’s borders.
The segment is expected to proceed growing in the coming months, supported by a broad-based economic recovery and also return-to-office momentum. Colliers expects rents for CBD premium as well as Grade-A workplaces to grow by 4% to 5% in 2022.
Colliers recommends occupants take very early activity on future workplace choices, as the market shifts in favour of proprietors. Landlords of office possessions with outdated specifications must take into consideration repurposing or redeveloping their possessions, to future-proof them.
At the same time, on the financial investment front, ordinary capital worths in the segment enhanced 5.6% q-o-q in 1Q2022, striking $2,850 psf. Similarly, net yields compressed by 0.1% q-o-q to 3.4%, with cap prices can be found in between 3% and also 3.6% in the last quarter.
The healthy and balanced leasing need for the CBD premium and also Grade-An office section is backed by corporates’ preference for newer office buildings with top notch specifications, to prepare for workers going back to the office as well as the anticipated pick-up in service activity.
On the back of limited returns and also rate of interest unpredictabilities, investors are recommended to focus on energetic asset supervision or improvement to accomplish return targets.