Singapore office market recovery well underway: Colliers
Premium and Grade-An office buildings in the CBD likewise remained to see solid leasing demand, with positive net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the vacancy rate tightened to 3.3%.
The segment is expected to proceed expanding in the coming months, sustained by a broad-based financial improvement and return-to-office momentum. Colliers anticipates rents for CBD premium and Grade-A workplaces to expand by 4% to 5% in 2022.
Leasing purchases throughout 1Q2022 included style seller Shein using up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will be relocating from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
The healthy and balanced leasing need for the CBD premium and also Grade-A workplace sector is backed by corporates’ choice for more recent office buildings with high-quality specs, to prepare for employees returning to the workplace as well as the anticipated pick-up in service task.
Colliers recommends occupiers take early action on future office decisions, as the marketplace shifts in favour of property owners. Landlords of office properties with out-of-date requirements need to consider repurposing or redeveloping their assets, to future-proof them.
On the back of tight yields and also rate of interest uncertainties, investors are advised to concentrate on energetic property supervision or improvement to accomplish return targets.
Moving on, Colliers anticipates workplace possessions in prime areas to proceed drawing in a vast array of capital, underpinned by a healthy and balanced leasing market expectation, restricted new supply, and also the resuming of Singapore’s borders.
In regards to the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown location, along with the Shenton Way/Tanjong Pagar area, saw the greatest growth in rentals, increasing 2.3% q-o-q to get to $11.96 psf.
Meanwhile, on the financial investment front, typical funding values in the section enhanced 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Correspondingly, net yields compressed by 0.1% q-o-q to 3.4%, with cap prices coming in between 3% and 3.6% in the last quarter.
A workplace report by Colliers for 1Q2022 indicates that the improvement momentum in the Singapore workplace market is well in progress. Premium as well as Grade-An office rentals in the CBD climbed for a 3rd successive quarter in 1Q2022, raising 1.5% q-o-q to get to $10.26 psf, sustained by healthy leasing demand. This notes the fastest rate of development considering that rentals recoiled in 3Q2021.