Chart of the Day: Expect premium office space rents to increase up to 15% in 2015

Amid a challenging global outlook.

According to a report by Colliers, Singapore’s strength as a global headquarters location coupled with the expected limited supply of new office space in 2015 could see the average monthly gross rent for Premium Grade space in the Raffles Place/New Downtown micro-market increase by about 10% to 15% in 2015 while rents for the overall CBD Grade A and Grade B office space could increase by up to 10% for all of 2015, barring any external shocks.

Colliers adds that on the sales market front, Singapore’s office properties are foreseen to continue to attract healthy interest from end-users such as overseas corporate buyers and family concerns looking for suitable business and investment premises as well as opportunistic private-equity investors and institutional funds looking for yield accretive investment properties.

However, Colliers cautions that strict loan-to-value regulations and the impending interest rate hikes continue to weigh on purchasers’ decision making processes and could cap the growth in capital values for Premium Grade and Grade A office space in the Raffles Place/New Downtown micro-market at 5% in 2015, assuming economic conditions remain on a firm growth path.