Office rents predicted to jump 1-3% in 4Q

Buying sentiments to be dampened by credit restraints.

According to Colliers International, on the back of brighter global and domestic economic prospects, Singapore’s office leasing market is expected to continue to improve in the last quarter of 2013 – supported by a broad base of demand drivers from commodity traders to law firms, to companies in the energy, finance and insurance, as well as information and communication sectors.

Ms Chia Siew Chuin, Director of Research & Advisory at Colliers International, says, “Office rents could continue to trend upwards in 4Q 2013 at a modest rate of about 1-3 per cent – given that businesses are still expected to keep a close watch on costs.

This could bring the full-year rental growth for office space to between 1 per cent and 7 percent for the different micro-markets, reversing the 4.6-15.6-per-cent contraction in 2012.”

For the sales market, although buying sentiments could continue to be dampened by credit restraints in the short term, demand could still be supported in the long term by an increasing number of companies who prefer to own their office premises to have better control of their long-term operational costs, as well as to enjoy potential capital appreciation of their properties.

Recovery in office rents would also provide investors with better returns. Ms Chia concludes, “The average capital values of overall Premium and Grade A office space islandwide have increased by 2.2 per cent in the first nine months, and are expected to stay relatively stable for the rest of the year.

Hence, the full-year escalation which is projected at around 2.2 per cent will outpace the marginal climb of 1.2 per cent in 2012.