Office rents to see positive growth in 2021: CBRE Research

The firm said office rents will pick up in H2 2021.

Office rents would fare better in H2 2021 and consequently result in an overall positive rental growth next year, said real estate services provider CBRE’s research arm.

The forecast was based on the Ministry of Trade and Industry’s projection that Singapore’s economy would grow by 4% to 6% in the following year.

“Office demand is expected to remain relatively subdued in H1 2021, as firms will still remain cautious in the wake of the COVID-19 pandemic,” CBRE Research said. “Should economic activity and business sentiment recover after the administration of the vaccine by Q3 2021, the office market is well poised to benefit from the gains in employment.”

According to CBRE Research, five new projects are slated for completion by 2021 and will add 1.23 million sq m to the current office stock. There’s only one Grade A office development amongst the five projects. It is CapitaSpring, and it will add 0.65 million sq m of office stock to the Grade A (Core CBD) market.

“The initial office supply pressure for 2022 has been dissipated due to construction delays, but which augured well for the office market as it provided more time for pre-leasing activities,” CBRE head of research in Singapore and Southeast Asia Desmond Sim commented. “The future supply that will spread over a longer time horizon allows demand and supply dynamics to recalibrate.”

Meanwhile, as AXA Tower and Fuji Xerox were slated to undergo redevelopment, CBRE Research forecast the Grade B office market to see increased occupier movement due to the displacement of occupiers in those buildings.