Office property market is not overheating after all

Thanks to competition for tenants, rental growth of Grade A office space has been in check.

Mr Calvin Yeo, Eecutive Director of Office Services at Colliers International, said, “As of 2Q 2011, overall CBD Grade A office rents remains some 37.4 per cent below the peak of S$14.22 per sq ft per month achieved in 3Q 2008, while the average monthly gross rents of Grade A office space in the Raffles Place/New Downtown micro-market is still some 41.9 per cent off the S$17.89 per sq ft per month in 3Q 2008.”

He pointed out that the release of the large amount of government land sites sold during the 2007/2008 market boom, which resulted in a strong pipeline of projects today to meet the wave of buoyant demand, has played a large part in bringing about this gentler recovery path.

"Additionally, competition for tenants – given the normalization of demand amid rising supply of office space, as well as business park space as an alternative option for qualifying users – has helped to keep the rental growth of Grade A office space, specifically in the Raffles Place/New Downtown micro-market, in check," explained Mr Yeo.

Colliers International noted: