Increase in supply will moderate rental growth
September 2011
There is no doubt that the increase in supply has moderated rental growth and as the flight to quality continues, it is the established buildings in prime locations that will feel the impact most. There are relatively high occupancy rates in the micro-markets of Tanjong Pagar and Orchard Road and these areas are less affected by the relocations in the financial district.
We expect a period of stability in the rental market for the next few years as the overhang of secondary space is slowly absorbed and with several new major schemes coming on stream over this period, any fluctuations in rates should be kept to a minimum.
It is predicted that the importance of Singapore as a regional financial hub will grow significantly over the next 2-3 years as other major financial centres such as Hong Kong become stifled by lack of supply and growth hindered there by escalating rentals. Hong Kong’s average prime rates are already at record levels of HK$150 per sq ft (S$25.00 per sq ft) and are set to increase further for the next 3 years whereas Singapore’s average stands at $13.00 per sq ft and should be stable over the same period. The future looks good for the Singapore office market. |
