Analysts baffled by office space dearth in 1H15 land sales programme

An extreme supply crunch might happen again.

Singapore’s prime office rents have been increasing at a rapid rate in the past quarters, due mostly to a current dearth of office space in the island. This is why it was surprising that the government did not release any sites for office development in the 1H15 Government Land Sales Programme.

Colliers notes that though there is an adequate supply of office space within the Downtown Core between 2016 and 2018, office supply is expected to again become tight beyond 2018.

“The Government would appreciate the lessons of the 2007 office supply crunch situation, when limited new supply led to all time record high office space rents, and might have considered releasing a regulated pipeline of office space supply in order to ensure that no one year is left without any room for business expansions due to construction scheduling,” noted Colliers.