Singapore office market recovery well underway: Colliers
Premium and also Grade-An office complex in the CBD likewise remained to see strong renting demand, with positive net absorption of around 134,000 sq ft in 1Q2022. Meanwhile, the vacancy rate tightened up to 3.3%.
Leasing deals throughout 1Q2022 consisted of style merchant Shein occupying 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical firm BASF will be moving from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.
Moving on, Colliers anticipates workplace properties in prime locations to proceed drawing in a large range of capital, underpinned by a healthy leasing market expectation, minimal new supply, as well as the reopening of Singapore’s borders.
Colliers advises occupants take very early action on future office choices, as the marketplace shifts in favour of landlords. Landlords of office possessions with obsolete requirements must consider repurposing or redeveloping their properties, to future-proof them.
The healthy leasing need for the CBD premium and Grade-A workplace sector is backed by corporates’ choice for newer office buildings with high-quality requirements, to prepare for staff members returning to the workplace as well as the anticipated pick-up in company activity.
On the back of limited yields and also interest rate unpredictabilities, capitalists are suggested to focus on active asset control or improvement to achieve return targets.
A workplace report by Colliers for 1Q2022 shows that the recovery momentum in the Singapore office market is well in progress. Premium as well as Grade-An office rents in the CBD increased for a 3rd consecutive quarter in 1Q2022, raising 1.5% q-o-q to get to $10.26 psf, supported by healthy and balanced renting need. This notes the fastest pace of growth because rentals recoiled in 3Q2021.
On the other hand, on the financial investment front, ordinary capital values in the sector enhanced 5.6% q-o-q in 1Q2022, striking $2,850 psf. Likewise, net yields compressed by 0.1% q-o-q to 3.4%, with cap rates coming in between 3% and 3.6% in the last quarter.
The section is expected to proceed expanding in the coming months, supported by a broad-based economic recovery and return-to-office momentum. Colliers prepares for rentals for CBD premium as well as Grade-A workplaces to expand by 4% to 5% in 2022.
In regards to the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown area, as well as the Shenton Way/Tanjong Pagar location, saw the highest possible development in rentals, enhancing 2.3% q-o-q to reach $11.96 psf.