Chart of the Day: Tightening office vacancy rates loom in 2022 as tenants snap up limited supply

Marina Bay vacancy levels are expected to tighten to single-digits.

Singapore's office market is expected to maintain its positive trajectory over the coming years unlike other APAC markets who are bottoming out with vacancy rates poised to tighten across major CBDs, according to DWS Asia Pacific Real Estate Strategic Outlook.

Occupants are expected to aggressively snap up the massive offce supply installed in 2017 with vacancy levels in Marina Bay poised to crash to single digits from 19.3% in 2017 to an average of 8.5% from 2018 to 2022. Vacancy levels on Shenton are also expected to fall from 10.9% to an average of 9.4% over the same period.

On the other hand, vacancy levels in Raffles Place are poised to inch up marginally from 4.7% in 2017 to 6.8% in 2018 to 2022. 

"Singapore, which experienced a supply surge in 2017, is expected to benefit from a strong cyclical recovery as supply pressures subside significantly," the report's authors said. 

Also read: Supply crunch to boost Grade A office rents by 10% in 2018

Tightening vacancy levels in the Lion City is in stark contrast with the office markets of Japan, Australia and Hong Kong who are expected to have more unoccupied offices along with Kuala Lumpur, Beijing and Guangzhou where large development pipelines are underway. 

"Combining our rental growth and vacancy projections, we expect improving occupancy levels to underpin moderate to strong rental growth in the eastern seaboard cities in Australia, Singapore, Shanghai, and the regional cities in Japan," added DWS.