Singapore office market recovery well underway: Colliers
The sector is expected to proceed growing in the coming months, supported by a broad-based economic improvement as well as return-to-office momentum. Colliers prepares for rents for CBD premium and Grade-An offices to grow by 4% to 5% in 2022.
Premium as well as Grade-An office complex in the CBD also remained to see solid leasing demand, with positive net absorption of around 134,000 sq ft in 1Q2022. Meanwhile, the vacancy price tightened up to 3.3%.
At the same time, on the financial investment front, ordinary resources worths in the sector increased 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Similarly, net returns pressed 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.
Moving forward, Colliers expects office assets in prime locations to continue drawing in a variety of resources, underpinned by a healthy leasing market expectation, minimal new supply, and the reopening of Singapore’s borders.
The healthy and balanced leasing need for the CBD premium as well as Grade-A workplace segment is backed by corporates’ choice for newer office buildings with high-quality specs, to prepare for workers going back to the workplace and the expected pick-up in business activity.
In terms of the CBD micro-markets tracked by Colliers, office buildings in the Raffles Place/New Downtown location, along with the Shenton Way/Tanjong Pagar area, saw the greatest development in rentals, increasing 2.3% q-o-q to reach $11.96 psf.
An office report by Colliers for 1Q2022 suggests that the recovery momentum in the Singapore workplace market is well underway. Premium as well as Grade-An office rentals in the CBD increased for a third successive quarter in 1Q2022, increasing 1.5% q-o-q to get to $10.26 psf, supported by healthy leasing need. This marks the fastest speed of development given that rentals recoiled in 3Q2021.
On the back of limited yields and also rates of interest unpredictabilities, financiers are advised to focus on active asset management or improvement to attain return targets.
Leasing deals during 1Q2022 consisted of style seller Shein taking up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will certainly be transferring from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
Colliers suggests tenants take very early activity on future office choices, as the marketplace shifts in favour of property managers. Landlords of workplace properties with outdated requirements must think about repurposing or redeveloping their possessions, to future-proof them.
