Chart of the day: Office landlords in trouble as bank hiring sentiment crumbles

Vacancy will hit record highs in 2016.

Analysts warn that demand for Grade A office space in Singapore will slow markedly this year, with a massive supply surge exacerbated by tepid hiring in the financial services sector.

According to Maybank Kim Eng, the pace of hiring in the financial services sector is expected to drop on back of weak business sentiment. This will negatively impact office space demand, as financial services players are main consumers of Grade A space.

"With demand soft in the face of record supply, vacancy is expected to peak in 2016 at 12.1% in the CBD and taper from there," said the report.

Maybank Kim Eng noted that rents could keep falling until 2018 as the supply overhang gets absorbed. The report reckons that supply as a multiple of expected demand is expected to average 2.2x over three years.