Singapore office market recovery well underway: Colliers

Leasing transactions throughout 1Q2022 consisted of style store Shein occupying 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical company BASF will certainly be transferring from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.

On the back of tight yields and rates of interest unpredictabilities, investors are suggested to focus on energetic possession supervision or enhancement to attain return targets.

Premium and Grade-An office buildings in the CBD likewise remained to see solid leasing demand, with positive net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the job price tightened to 3.3%.

Moving on, Colliers expects workplace assets in prime locations to continue drawing in a wide range of funding, underpinned by a healthy leasing market overview, limited new supply, and the resuming of Singapore’s borders.

Colliers recommends occupiers take very early action on future workplace decisions, as the market shifts in favour of property owners. Landlords of office properties with obsolete requirements must think about repurposing or redeveloping their possessions, to future-proof them.

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In terms of the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown area, as well as the Shenton Way/Tanjong Pagar location, saw the greatest growth in rents, increasing 2.3% q-o-q to reach $11.96 psf.

At the same time, on the investment front, typical resources values in the segment raised 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Likewise, net yields pressed by 0.1% q-o-q to 3.4%, with cap prices being available in between 3% as well as 3.6% in the last quarter.

The healthy leasing need for the CBD premium and also Grade-An office segment is backed by corporates’ preference for newer office buildings with high-grade requirements, to prepare for staff members returning to the workplace and also the anticipated pick-up in service activity.

A workplace report by Colliers for 1Q2022 indicates that the improvement momentum in the Singapore workplace market is well underway. Premium as well as Grade-A workplace rentals in the CBD climbed for a third successive quarter in 1Q2022, enhancing 1.5% q-o-q to reach $10.26 psf, sustained by healthy renting need. This notes the fastest speed of growth since rents rebounded in 3Q2021.

The sector is expected to proceed growing in the coming months, sustained by a broad-based economic recovery and also return-to-office momentum. Colliers expects rentals for CBD premium and also Grade-A workplaces to grow by 4% to 5% in 2022.

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