Singapore office market recovery well underway: Colliers
The healthy leasing need for the CBD premium and Grade-A workplace segment is backed by corporates’ preference for newer office buildings with high-quality specifications, to prepare for employees going back to the office as well as the anticipated pick-up in organization activity.
The segment is expected to continue growing in the coming months, supported by a broad-based financial improvement and return-to-office momentum. Colliers expects rents for CBD premium and also Grade-An offices to expand by 4% to 5% in 2022.
Leasing purchases throughout 1Q2022 included fashion merchant Shein using up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical company BASF will be relocating from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.
On the other hand, on the financial investment front, average capital values in the segment raised 5.6% q-o-q in 1Q2022, striking $2,850 psf. Alike, net returns pressed by 0.1% q-o-q to 3.4%, with cap rates being available in between 3% as well as 3.6% in the last quarter.
Colliers advises tenants take very early action on future office choices, as the marketplace changes in favour of proprietors. Landlords of office possessions with out-of-date requirements ought to think about repurposing or redeveloping their possessions, to future-proof them.
Premium and Grade-An office complex in the CBD also continued to see solid renting demand, with positive net absorption of around 134,000 sq ft in 1Q2022. Meanwhile, the openings price tightened up to 3.3%.
On the back of tight returns and rate of interest uncertainties, investors are encouraged to concentrate on active asset management or enhancement to accomplish return targets.
Moving on, Colliers anticipates workplace properties in prime places to proceed attracting a wide variety of funding, underpinned by a healthy and balanced leasing market outlook, minimal brand-new supply, and also the reopening of Singapore’s borders.
An office report by Colliers for 1Q2022 indicates that the recovery momentum in the Singapore workplace market is well underway. Premium and also Grade-An office rents in the CBD increased for a third consecutive quarter in 1Q2022, increasing 1.5% q-o-q to get to $10.26 psf, supported by healthy leasing demand. This marks the fastest rate of growth given that rents recoiled in 3Q2021.
In regards to the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown area, as well as the Shenton Way/Tanjong Pagar area, saw the greatest growth in rentals, enhancing 2.3% q-o-q to get to $11.96 psf.