Singapore office property market up 8% quarter-on-quarter in 1Q 2011:Colliers

Average monthly gross rents Grade A office space reached S$9.72 per sq ft in 2011.

According to Mr Calvin Yeo, Executive Director of Office Services, Colliers International, “The growth in the local office market – specifically, the Raffles Place/New Downtown micro-market – was spurred, in part, by the robust occupier demand for new and upcoming office buildings, as firms rushed onboard the flight to quality before the affordability tapers off.”

Additionally, with Asia gradually replacing the West as the fastest-growing region in the world, more wealth management funds, such as Belmont Investments, are setting their footprints in Asia – choosing Singapore as one of the preferred destinations due to its strategic location and conducive business environment.

This is also in line with the Government’s effort in establishing Singapore’s position as the Global-Asia Hub, a location of choice in Asia for global companies, as well as a launch pad for Asian enterprises to globalise.”

The rosy demand outlook is spurring developers to commence the development of major new projects in 2011 – so as to ride on the new wave of office demand that is expected to be sustained into the medium term, in which a moderation in the supply of new office completion is expected. While the 3.1 million sq ft of new office space slated to be completed in 2011 is still on schedule, continued flight to quality has seen overall pre-commitment rates edging up to about 60 per cent in 1Q 2011, from 50 per cent in 4Q 2010.

Additionally, apart from potential re-development of aging office blocks which could mitigate the net addition to stock, some owners of older office buildings have temporarily removed their space from the market to conduct asset enhancement works, so as to raise their offerings to existing and potential tenants.

According to Ms Tay, “Office rents for the whole of 2011 is expected to trend up, albeit at a milder range of between 15 per cent and 20 per cent, down from almost 30 per cent in 2010.”