Office rents to decline by 10% in 2017 as supply surges

About 3m sqft of space is coming on-stream.

The office space market will be welcomed next year by a surging amount of space supply -- at around 3m sq ft. of space are coming-onstream in 2017, putting much further pressure on rents.

According to RHB analyst Vijay Natarajan, office rents are to decline by 5% to 10 % on the back of this high supply, which is compared to the 10-year average demand of 1.25m sqft.

"A likely bottom for office sector rents could come in early 2018, with a slight ease in supply," he says.

He noted, however, that some REITs have mitigated risks by forward renewing most of their leases.

"CapitaLand Commercial Trust is our top sector pick as we expect it to unlock shareholder value via redevelopment of Golden Shoe Car Park and AEIs at Raffles City," he notes.