Still the third most expensive for office rents

Source : Today – 5 Aug 2010

Singapore has held on to its position as the third most expensive office location in the Asia-Pacific region for the second quarter of this year, according to Colliers International’s latest Asia Pacific Office Market Overview.

Singapore commanded annual gross rents of about US$58 ($77) per square foot (psf) in the second quarter, while Tokyo and Hong Kong took top and second spot with rents of around US$101 psf and US$89 psf, respectively.

Sydney and Mumbai completed the top five most expensive office locations in the report.

“The overall office leasing demand in the region showed no signs of abating in 2Q2010, despite the imminent threat of a sovereign debt crisis in Europe,” Colliers said in its report.

Occupiers engaged in the financial services sector dominated leasing demand, particularly in financial hubs like Hong Kong and Singapore.

Mr Donald Han, managing director (Singapore) at real estate consultancy Cushman and Wakefield, believes a combination of consolidation and upgrading among tenants will be the key trends driving the second half.

Apart from the financial sector, growth will be broadened by other industries such as professional services and shipping companies, he said.

Landlords of Grade A properties in Singapore have less to worry about considering the three-consecutive-quarter increase in the absorption rate, observed Mr Han.

He cautioned that the flight to quality among tenants will likely put pressure on landlords of older buildings to refurbish and re-position themselves.

Analysts said Singapore’s office rents are expected to strengthen further by 10 per cent in the second half this year. This is because, despite the rise in the second quarter, office rental rates are still 60 per cent below the peak in late 2007.