Singapore office market fundamentals top in Asia-Pacific

SINGAPORE offers the strongest office market fundamentals for Grade A office space among core Asia-Pacific markets, in terms of rental growth as well as low vacancies for next year, according to Cushman & Wakefield.

This follows a strong showing by the Republic this year.

Cushman’s 10.88 per cent estimated growth in its average Grade A office rental value this year is the highest among the 13 core markets in the region tracked by the property consulting group, ahead of gains of 7.69 per cent for Tokyo and 3.02 per cent for Hong Kong, among the major financial centres in Asia-Pacific. (View infographic)

Cushman includes prime space in its Grade A office basket.

The increases were ranked based on rents in local currencies. For Singapore, Cushman estimates the average Grade A monthly rental value as at end-2014 at S$10.45 per square foot (psf), up from S$9.43 psf at end-2013.

By end-2015, the figure is projected to rise 5.67 per cent to S$11.04 psf. This pace of growth is expected to be surpassed only by Tokyo, among the core regional markets, with 7.14 per cent projected increase next year to 843 yen (S$9.32) psf at the end of next year.

Although gains in Tokyo will likely pip Singapore’s next year, Cushman’s managing director of research for Asia-Pacific, Sigrid Zialcita, argues that “Singapore’s economy, on the whole, is on a firmer footing and thus, the island’s office market fundamentals will remain strongest in the region, as compared to the markets of Australia and South Korea, which continue to face excess supply. Vacancies in the Singapore market will fall to be the lowest as compared to the other core markets in the region”.

Singapore’s closest regional financial centre rival, Hong Kong, is expected to post 2.17 per cent growth in average Grade A monthly rental value to HK$110.98 (S$18.75) psf by end-2015 from HK$108.63 psf at end-2014.

Mr Zialcita suggested that the recent political tension in Hong Kong could result in a positive effect on Singapore – while acknowledging that the two cities served two distinct parts of Asia.

“We think Singapore’s rapid rise as the region’s largest centre for both commodity and foreign exchange trading, as well as its growth as a wealth management hub and regional headquarters hub, will continue to make it a choice destination for MNCs.”

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