S’pore Tops in Office Rental Growth
S’pore Tops in Office Rental Growth
The increase in the third quarter Grade A rents here in Singapore have made the office space owners very happy. The increase greatly outweighed the gains made in other business centres in the Asia Pacific region.
According to a survey made by Jones Lang LaSalle (JLL), Singapore and Beijing, China topped the list. In local currency terms, both garnered quarterly net effective rental growth of 10.9 per cent. This reflects the net rental income that goes to the property owners and is exclusive of payables such as property taxes and maintenance fees.
The total occupancy cost paid by a tenant is called the gross rental income. While net rental income is a the pure rental income that goes to the owner after deducting all maintenance fees and property taxes that have to be paid.
Out of 26 Asia Pacific cities that were considered in terms of net effective rent incomes, Singapore came out fourth. Per JLL, an average of US$671 (S$870) per sq m went to the property owners.
Singapore’s ranking followed those of Hongkong, Tokyo and Mumbai. But Singapore was ahead of other regional business centres such as Ho Chi Minh City, Kuala Lumpur and Bangkok. They were ranked were 6th, 21st and 22nd, respectively.
In the third quarter, the average Grade A gross effective rent here in Singapore was $8.70 per sq ft of net rentable area per month. This rate is below peak levels in the years 1991, 1996 and 2008 which carried a percentage of 16 per cent, 23 per cent and 52 percent, respectively. But it was above level in the year 2000. The statistics were gathered by the JLL.
More increases are expected by the end of the year , notwithstanding the 12.3 per cent prime Grade A gross effective increase already earned.
The outlook looks good also the years 2011 and 2012. The potential for increase is already forecast based on the current trends. JLL reported.
A lot of office spaces is expected to be opened by next year. This means that there will be a lot of openings for office rentals. Vacancy levels will also rise next year.
Rental growth is expected to be slower in first half of next year inspite of the steady demand as compared with the second half of the year up to the year 2012.
As stated by Chris Archibold, JLL head of markets, the last six months evidenced an increasing level in tenancy interest. Part of this was brought about by the various relocation investments made by other countries. These relocation moves and show of confidence in the area further boosted investors’ thrust.
He further added that although there will be an increase in vacancies next year, this will not pose any threat or problem in connection with rental rates. Most of the office space units have already been committed or pre-sold.
More markets are expected to gain in strength as the bargaining power of the office space owners increases. This is evidenced by the 1.8 percent increase in the third quarter as reported by the Asia Pacific Office Rental Index.
This increase in prime office rates was helped considerably by the relocation of multinational corporations within the area and the expansion plans of the existing companies in the area. These multinational companies created the demand for office space, according to Mr Ong Kah Seng, senior manager for Asia Pacific Research of Cushman and Wakefield’s.
These companies generally accept the fact that rental rates are still considered on a low level as compared to the peaks achieved in mid-2008. He further states that an oversupply of office space will not occur since construction of new buildings was very slow and at a low level in the years 2008 and 2009. Again, no real estate market bubble is forecast.
Buy Sell Rent invest In Singapore Property Real Estate
Mindy Yong
( +65 ) 91002985
Mindy@MindyYong.com
www.hotvictory.com
www.property-elite.com
UOL Group Reports Strong Sales of Spottiswoode Residences Condo »« China buyers dominate in S’pore Properties project
