Singapore Q3 office rents posted steepest fall across Asia

Prime office rents dropped 2.8%.

Knight Frank (KF) Asia-Pacific Prime Office Rental Index grew 0.6% in Q3 2016 compared to the previous quarter as a result of rising rents in eight markets and rental declines in six markets.

Singapore sees the largest decline in rental due to slowing global economy while Tokyo continues to experience the highest rental growth, although demand is expected to taper off as a strong supply pipeline looms.

The index monitors prime office rents in 19 cities across Asia-Pacific. For Q3 2016, eight cities registered positive rental growth, down from 10 in the previous quarter.

Going forward, it expects rents in 14 cities to remain steady or increase, unchanged from last quarter’s forecast.

The research house notes that while it is still early days, the results of the US election is likely to lead to more uncertainty across the region, with the likely end of the Trans-Pacific Partnership (TPP) a blow to export-dependent economies.

Nicholas Holt, Head of Research for Asia-Pacific, says, “The outlook for the regional economy is uncertain as the future of the TPP hangs. We expect a knock-on effect on office demand when export-driven economies are dealt a blow should the TPP be dissolved.

“Given the significant amount of supply coming into a number of markets, we do see opportunities for occupiers to upgrade into superior space, as the pendulum swings from landlord to tenant-friendly conditions.”