Singapore office market recovery well underway: Colliers
The healthy leasing demand for the CBD premium as well as Grade-An office segment is backed by corporates’ choice for more recent office complex with top quality specifications, in preparation for employees returning to the office and also the anticipated pick-up in company activity.
Colliers suggests occupiers take very early action on future workplace choices, as the market changes in favour of proprietors. Landlords of office assets with obsolete requirements must consider repurposing or redeveloping their properties, to future-proof them.
On the back of limited yields and rates of interest unpredictabilities, investors are encouraged to focus on active asset management or enhancement to accomplish return targets.
Meanwhile, on the investment front, average resources worths in the segment boosted 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Likewise, 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.
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 highest development in rentals, boosting 2.3% q-o-q to get to $11.96 psf.
The segment is anticipated to proceed growing in the coming months, sustained by a broad-based economic improvement and also return-to-office momentum. Colliers anticipates rentals for CBD premium as well as Grade-An offices to grow by 4% to 5% in 2022.
Moving on, Colliers anticipates workplace properties in prime locations to continue bring in a wide range of funding, underpinned by a healthy leasing market expectation, minimal brand-new supply, and the resuming of Singapore’s borders.
An office statement by Colliers for 1Q2022 indicates that the improvement momentum in the Singapore workplace market is well in progress. Premium and also Grade-A workplace rents in the CBD increased for a third successive quarter in 1Q2022, boosting 1.5% q-o-q to get to $10.26 psf, supported by healthy leasing demand. This marks the fastest speed of development since rentals rebounded in 3Q2021.
Premium and also Grade-An office buildings in the CBD also remained to see solid leasing demand, with favorable net absorption of around 134,000 sq ft in 1Q2022. At the same time, the vacancy rate tightened to 3.3%.
Leasing deals during 1Q2022 consisted of fashion retailer Shein taking up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will certainly be moving from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.