Why office rents could still improve in second half of 2013

Improving market sentiments to drive up prices.

According to Colliers' quarterly property report, there are still positive signs to indicate that office rents could improve in 2H 2013 which it said are underpinned by the continuous initiatives by the Government to grow the city’s economic base and to develop the Republic as a Global-Asia hub.

Demand for office space is, therefore, expected to continue to be supported by financial institutions, legal and private equity firms, as well as businesses in other professional and business services industries, said Colliers.

Ms Chia Siew Chuin, Director of Research & Advisory at Colliers International, says, “On the back of improving market sentiments, and given that more office tenants are on the lookout for modern and efficient floor layouts, rents for Premium Grade office space in the Raffles Place/New Downtown micro-market is expected to head north in 2H 2013 by up to 5 per cent.

Meanwhile, office rents in the other micro-markets are expected to stay relatively flat, with some marginal upsides until the end of 2013.”

For the sales market, office properties are expected to continue to appeal to end users and investors with a long investment horizon – underpinned by the low interest rate and high liquidity environment. Ms Chia concludes, “Strengthened by the bottoming-out of office rents, overall office capital values have the potential to climb by another 2-3 per cent in the next 6 months.”