Office rents in Singapore to edge up 0.5% by end-2013

Leasing activity also expected to pick up.

According to Knight Frank, in light of the circumstances, it expects overall islandwide rents to remain flat with a possibility of marginal increases of around 0.5% towards the end of 2013.

It also noted that despite the softening office rentals seen over the last few quarters, the low rents enable Singapore to retain its competitiveness and attract global companies to be based here.

Companies who are looking to establish themselves in Asia may choose Singapore as the more cost efficient business city over Hong Kong where rents are about 70% higher. As at 4Q12, Prime Gross Effective Rents in Hong Kong stood at $18.20 per sq ft per month. 

In addition, Singapore's position as a regional hub is further boosted by the entry of more certified Qualifying Law Practice firms.

The report also added that despite softening rents, office market leasing is likely to bottom out late this year. Within the Central Business District, Asia Square Tower 2 is set to be completed in 3Q 2013.

With a current estimated pre-commitment rate of 30%, prime rents are expected to be marginally affected. In the coming months, Knight Frank also expects to see a decline in rents in the Shenton Way/Tanjong Pagar and Robinson Road precint.

The ongoing construction of buildings such as V on Shenton, Oxley Tower, and SBF Center would pose negative externalities for buildings in the area that will experience noise inconvenience. 

However, overall leasing activity in the next 6 months is expected to pick up, as enquiries and interests generated this quarter materialises into new tenancies.