Office rentals grow strongly in Q4

 December 22, 2010

Rentals in the Singapore office market have continued its upswing, growing strongly in the final quarter of the year, according to property consultancy Jones Lang LaSalle (JLL).

Based on its preliminary estimates, average Central Business District (CBD) Prime Grade A gross effective rent in the fourth quarter increased 7.5 per cent on-quarter to S$9.35 per square foot per month.

This translates to a 19.9 per cent increase on-year, from S$7.80 in the same quarter last year.

JLL said landlords had capitalised on their increased bargaining power, on the back of a temporary shortage of office space in the current market.

Meanwhile, in a separate report by property group DTZ Research, conventional industrial rents have seen a marginal rise over the same period.

Average monthly gross rental for first-storey private industrial space in the fourth quarter increased 2.5 per cent on-quarter. But it posted a 5.1 per cent rise from the previous year to S$2.05 per sq foot.

Rents for upper-storey space grew 3.1 per cent on-quarter, and 6.5 per cent on-year to S$1.65 per square foot per month, said the DTZ report.

Average rental for hi-tech industrial properties, which include the business parks and science parks, saw an increase of 1.6 per cent on-quarter and 3.2 per cent on-year to S$3.20 per sq ft per month in the fourth quarter.

Rents for hi-tech industrial properties are still about 28.9 per cent below the peak in the third quarter of 2008.

Capital values for industrial properties grew at a faster rate as compared to the previous quarter, fuelled not just by end-users but also investors.

Average capital values for first-storey industrial space grew 2.3 per cent to S$525 per sq ft in the fourth quarter, while average capital values for upper-storey industrial space rose 4.2 per cent from the previous quarter to S$370 per sq ft.

Average capital values for first-storey and upper-storey industrial space grew 6.1 per cent and 13.8 per cent on-year respectively.

“The implementation of measures to curb speculation in the residential property market and the lower quantum of industrial properties has led more investors to turn to the industrial market,” noted Ms Chua Chor Hoon, Head of DTZ South East Asia Research.

Source : Channel NewsAsia – 22 Dec 2010