Why demand may not be enough to drive office rents up

Rental declines are more likely.

According to Maybank Kim Eng, even as business expectations improved in 2Q13 which helped to support office rents, demand is insufficient to drive rentals up substantially, especially when there is ~600,000 sq ft of Grade A space left to fill at Asia Square Tower 2.

Local and regional economic growth remains challenging and expectations for growth in 2014 may also have to be moderated.

"We now expect flat Grade A rents in 2013 and a 5%-decline in 2014. For Grade B offices, we expect rental declines of 5% and 10% respectively in 2013 and 2014, as the relocation process gathers pace," Maybank Kim Eng said.

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