Why Singapore office rents cheapened in Q4

Slumping demand and market corrections may have slashed 4% from grade A office rents.

Singapore grade A offices should hover around $786 per sq. m per annum as of Q4 2011, according to a preliminary report from Jones Lang LaSalle.

“Overall rental growth is expected to soften this quarter. The standout trend across many key markets is a softening of demand from occupiers, as firms are applying caution in light of economic difficulties in the United States and the Euro-zone. We expect corporates in Asia Pacific to remain cautious for the remainder of this year and into next as they wait to see how the region will be impacted by what is happening elsewhere," says Jeremy Sheldon, Managing Director, Markets Asia Pacific at Jones Lang LaSalle.

Jones Lang LaSalle says Singapore, along with Hong Kong, is entering a "rental level correction phase," which will result in slightly lower office rent prices. Meanwhile, most of the rest of Asia will see office rent hikes.

"We do expect to see continuing demand in certain markets where there is a strong domestic focus – China, Japan and India and emerging markets in South East Asia – however the more transparent markets are where occupiers are far more cautious,” says Mr. Sheldon.