Landlords cashed in on economic boom in 2010, hiked office rents by 12.6%

Rental and capital value of office space rebounded in 2010 from bottom in 2009, leases in the central region increasing 4.7% in 4Q2010 compared to 6% in previous quarter.

In a statement, Phillip Securities Capital said that value of office space increased 4.8% in the quarter compared to 6.1% in 3Q2010, and 18.9% for the whole 2010 (2009: -16.8%). Vacancy rate stayed flat at 12.7% in 4Q2010 compared to 12.6% in 4Q2009.

The jump is attributed to the strong economy growth in Singapore and the Asia Pacific region.

For 2011, the securities company expects rental for Grade-A office space to grow moderately between zero to 5%, due to plentiful supply of new stocks but supported by strong economy growth that will continue to drive demand for office space. It also issued different ratings for top property developers.

“We continue to like OUE for its exposure in prime office assets in Singapore and SC global, which is in the ultra luxury residential segment, for its spread of profit margins in residential developments. We maintain our recommendations of Buy for OUE and SC Global, and Hold for Keppel Land, Ho Bee, and Sing Holdings,” Phillip Securities said.