S’pore no longer one of the top 20 most expensive office locations globally

Source : Channel NewsAsia – 22 Sep 2009

Singapore is no longer one of the top 20 most expensive office locations globally.

A survey by property consultancy Colliers International showed that in June, Singapore’s office space was the 26th most expensive in the world.

That is a steep fall from December last year, when Singapore was number 6.

Colliers said this is because Singapore’s office property market was among the most severely affected by the global financial crisis, with rents dropping 42.3 per cent in the first half of this year.

The only other city in the world which registered a sharper drop in office rents was Riga, in the Eastern European nation of Latvia, where rentals fell 49.6 per cent.

Colliers noted that Singapore has 10 million square feet of office space under construction, and when this supply is made available, it is likely to keep office rents in the doldrums for a while more, despite the improving economic outlook.

Analysts from Jones Lang LaSalle agree, saying that despite increased market activity, the substantial upcoming supply continues to weigh on the market.

Under pressure to secure occupancy, some landlords continue to be aggressive on rentals, according to Jones Lang.

Preliminary data shows that the average gross effective rent of Prime Grade A properties in the CBD Core area fell by 12.6 per cent to S$8.30 per square foot per month in the third quarter, compared to the second.

Jones Lang added that there have also been instances of landlords offering cash subsidies to attract prospective tenants in order to keep effective rentals high.