Rents for Grade A office space to fall by 15 per cent in 2012: S

December 16, 2011 ⋅

 

Property consulting firm Savills expects Singapore’s overall rents for Grade A office space to trend downwards by 15 per cent in 2012.

 

In its latest report, Savills adds that capital values of these properties will also soften by 10 per cent.

 

It says that “negative fallout arising from the prolonged financial turbulence and global economic slowdown has intensified, resulting in slower absorption of Grade A office space. This has continued to push up vacancy rates and put downward pressure on rents in the Central Business District.”

 

Vacancy rates for Grade A offices in the prime district have edged up 6.1 per cent in the fourth quarter of this year.

 

This is higher than the 5 per cent vacancy rate in the last five quarters.

 

Meanwhile, rents fell 1.5 per cent to an average S$8.71 per square foot monthly in the fourth quarter from S$8.86 per sq ft three months before.

 

Capital value for these office spaces also fell for the first time since the trough in end-2009 to S$2,550 per sq ft from S$2,650 per sq ft in Q3.

 

On a yearly basis, capital values rose 8.5 per cent from S$2,350 per sq ft in Q4, while rents rose an average 7.8 per cent for the whole of 2011.

 

Layoffs in several banks have hurt the office market as firms also turn conservative and hold off expansion to save costs.

 

Source : Channel NewsAsia – 16 Dec 2011