Office rents could bottom out by 2018

Nearly 3m sqft remain vacant in the CBD.

Operating trends were not exciting in the office sector with Singapore real estate investment trusts (REITS) reporting negative rental reversions. Nonetheless, MayBank KimEng notes that there remain reasons to stay positive on office REITs.

News flow on leasing activities showed that 2.7m sf of new office space remains unleased in the CBD. However, the research house believes the low supply of prime office space in 2018-20 should give the market ample time to absorb this excess.

It cautioned though that the pace of rent rebound could be tempered by completion of additional space in 2021.

"We continue to see a bottom for office rents by early-2018," it said.

According to MayBank KimEng, CapitaLand Commercial Trust and Keppel REIT reported inline results, while Suntec REIT missed on weaker than expected retail performance.