Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
Knight Frank is taking a more positive shorter-term view, noting that Singapore’s labour market remains tight, with a re-employment price of 71.7% in 1Q2023, more than the pre-pandemic level of 65.9%, while general joblessness remained low at 1.8%.
With tight inventory in the CBD and also tenancy levels maintained by flight-to-safety plus flight-to-quality trends, Knight Frank foresees potentially higher leas than previously predicted. It predicts prime workplace leas to expand between 3% and also 5% this year, an enhancement from the estimated 3% development forecast made by the end of 2022.
Rents for prime offices in the CBD area saw small growth in 2Q2023, based upon real estates traced by specialists. In a June 26 press release, CBRE notes that effective gross rents for Quality An offices in the main CBD place signed up 0.4% growth q-o-q to reach $11.80 psf monthly. The company adds that vacancy rates for the sector continued to be affordable at 4%, underpinned by secure net absorption and no new supply.
Lentor Hills Residences Lentor Hills Road
Knight Frank claims occupancy degrees in Raffles Place also Marina Bay continued to be healthy, coming in at 95.8% and 94.4%, respectively, in 2Q2023, as companies remained to look for quality spaces in the CBD.
In its 2Q2023 workplace sector record, Knight Frank Research found that leas for prime quality offices it monitor in the Raffles Place and Marina Bay precinct increased 1.2% q-o-q to standard at $10.96 psf each month. It includes that this brought rental growth to 2.5% in the first half of 2023 in the middle of growing geopolitical tensions, inflationary pressures and also dominating financial gloom.
The development in 2Q2023 takes rentals rise for Quality A core CBD workplaces to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace services in Singapore, states the general office space market still sees well-balanced demand, provided by the maritime industry, private wealth and even property administration business, law office, professional services, and government agencies. The quarter also saw restored growth in renting demand by versatile work space providers, that have actually seen enhanced occupancy prices in their centres.
CBRE notes that sentiment stays mindful amid the current high-interest price atmosphere along with easing economic growth projections. It adds that shadow office space in the market remains “fairly high” and can potentially raise in the 2nd part of the year. CBRE’s head of analysis for Singapore and Southeast Asia, Tricia Song, claims that occupants in technology, cryptocurrency and even customer banking may look into quiting office space because of tough company conditions.
CBRE expects Grade A CBD office leas to stay fairly fixed for the remainder of the year prior to recouping in 2024. “With a solid trend of flight to quality, amidst a diminishing pool of quality workplaces in the CBD, Core CBD (Grade A) rental fees are topped for lasting growth,” includes Track.
