Singapore office market recovery well underway: Colliers
Colliers advises occupiers take very early action on future office choices, as the marketplace shifts in favour of property owners. Landlords of workplace assets with out-of-date specs need to consider repurposing or redeveloping their assets, to future-proof them.
Moving on, Colliers expects office possessions in prime places to continue bring in a variety of resources, underpinned by a healthy and balanced leasing market outlook, minimal brand-new supply, and also the reopening of Singapore’s borders.
At the same time, on the financial investment front, ordinary resources worths in the sector boosted 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Alike, net returns compressed by 0.1% q-o-q to 3.4%, with cap rates can be found in between 3% and 3.6% in the last quarter.
The section is expected to continue growing in the coming months, sustained by a broad-based economic recovery and also return-to-office momentum. Colliers prepares for rents for CBD premium as well as Grade-An offices to expand by 4% to 5% in 2022.
On the back of limited returns and interest rate unpredictabilities, financiers are encouraged to focus on energetic asset management or enhancement to attain return targets.
Leasing purchases during 1Q2022 included style retailer Shein taking up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will be moving from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
Premium as well as Grade-An office complex in the CBD likewise remained to see strong leasing demand, with positive net absorption of around 134,000 sq ft in 1Q2022. Meanwhile, the job rate tightened to 3.3%.
The healthy and balanced leasing need for the CBD premium as well as Grade-An office segment is backed by corporates’ preference for more recent office complex with high-quality requirements, to prepare for employees returning to the office and the expected pick-up in organization activity.
A workplace report by Colliers for 1Q2022 suggests that the recovery momentum in the Singapore workplace market is well in progress. Premium and also Grade-An office rents in the CBD climbed for a 3rd successive quarter in 1Q2022, raising 1.5% q-o-q to get to $10.26 psf, supported by healthy and balanced renting demand. This notes the fastest speed of development because rentals rebounded in 3Q2021.
In terms of the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown location, as well as the Shenton Way/Tanjong Pagar area, saw the highest possible growth in rents, increasing 2.3% q-o-q to get to $11.96 psf.