Office prices up 2.4% in Q4 2018

Office prices hiked 5.7% in 2018.

Prices of office spaces rose 2.4% QoQ in Q4, 2018, the Urban Redevelopment Authority (URA) revealed. Meanwhile, office rents grew 0.5% QoQ.

For the whole of 2018, office prices hiked 5.7% YoY compared to the 2.4% decline in 2017, the agency noted. Meanwhile office rents grew 7.4% YoY from a 0.4% advance in 2017.

Cushman & Wakefield Singapore senior director and head of research Christine Li noted that the diversion of the interest of institutional investors towards the commercial sector amidst the cooling measures in the residential market will buoy the office sector to continue to shine in 2019.

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“Even in the strata-titled office space, prime freehold and 999-year leasehold office located in central areas will also be highly sought after due to their inherent investment value and wealth preservation purposes,” Li explained, noting that investors have been eyeing to get prized office assets amidst the fast rising upcycle ahead of further rental escalation in 2019.

As at end of Q4 2018, URA revealed that the total supply pipeline of office space hit about 732,000 sqm. Meanwhile, occupied office space increased by 39,000 sqm whilst the stock of office space grew by 59,000 sqm, buoying island-wide vacancy rate of office space to hit 12.1% from 12% as of end Q3 2018.

Also read: Office market's takeup rate hit 1.59 million sqft in 2018

“Overall, the outlook appears positive for the next couple of years. Demand is steady while supply is tapering,” Desmond Sim, Head of Research, Singapore & Southeast Asia commented. “Interest for upcoming projects is also fairly strong with some notable pre-commitments already executed in 2019 and 2020.

For 2019, Li believes that the tech, co-working, insurance and finance sectors will fuel demand for office space.

“Whilst the tech sector took a backseat in 2018, leasing activity by tech companies may increase further this year,” she said. Firm in the ride-hailing segment are seeking to expand their presence in Singapore, with Go-Jek entering the fray in December.

Moreover, Li thinks that co-working operators will continue to buoy demand with multiple firms vying for market dominance.