PDF versionSingapore, - The Urban Redevelopment Authority (URA) released the Office real estate statistics for the second quarter 2008 (2Q 2008) today.
According to the URA, price and rental of office space in Singapore continued to grow but at slower rate in 2Q 2008. Specifically, prices of office space rose at a more moderate pace of 0.7% quarter-on-quarter (qoq) in 2Q 2008, which is slightly lower than the rate of 1.1% increase recorded in the previous quarter. Among the rental rates of all the different types of real estates, the office rentals grew at the fastest rate in 2Q 2008. Overall rentals for office space, based on leases that had commenced, increased by 6.3% in 2Q 2008, as compared with 7.3% in 1Q 2008. For the first six months of 2008, overall office rentals have grown by 14%.
The uncertainties in the financial markets had caused some companies to shelve their expansion plans,
resulting in a slower growth in office demand, and subsequently the deceleration of office rental growth. The
strength of the office rental growth was still concentrated within the Central Area, where the average office rents
grew by 6.9% qoq, while in office rental outside the Central Area increased by a smaller 1.8% qoq.
In terms of vacancy, the islandwide office space vacancy rate increased slightly to 7.8% in 2Q 2008, as compared 7.7% in 1Q 2008. Among all areas, the Rest of Central Area saw the highest increase in vacancy rate, from 10.7% in 1Q 2008 to 12.3% this quarter. On the other hand, as boosted by relocation trend to Toa Payoh, Newton and Bukit Merah etc., the vacancy rate of office in the Fringe Area dropped from 8.1% in 1Q 2008 to 7.2% in 2Q 2008.
As the Singapore economy is expected to expand steadily for the rest of the year, the demand for office space is still anticipated to be sufficient to absorb the new supply in 2008. Therefore, overall rentals are still expected to increase, but at a more moderate pace. For the whole of 2008, average office rentals are expected to expand between 16% and 22% yoy. For the rest of 2008, the average occupancy rate would still be the highest in the Downtown Core at about 95%, while the average nationwide occupancy rate would vary between 92% and 93%.
Nicholas Mak, Director of Consultancy & Research Department, Knight Frank, +65 6228 6821
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