Growing services sector to push office rents up by 12%

However, the surge will be stunted come 2019 to just 5%.

The service sector could push the office market into growth and higher demand for prime office space, Colliers International said.

According to their quarterly outlook, the continued broadening of growth to the service sectors plus modest supply pipelines in the short-term should pave the way for accelerated rent growth ranging 10% to 12% over 2018 and a more moderate 3% to 5% in 2019.

The services sector delivered a slow but steady step-up in contribution to GDP in each consecutive quarter amounting to +2.5% for full-year 2017, substantially stronger than 2016 (+1.0%).

Colliers senior analyst JieMei Tan said, "Looking ahead, the services sector is poised to deliver the lion's share of Singapore's real GDP growth in 2018, and this should cascade down into demand for prime office space."

Meanwhile, rents may dip slightly by 4% in 2020 in anticipation of the large supply slated to come on-stream in 2021.

Tan forecasts that the next supply jump may only occur in 2021 due to Golden Shoe Car Park's redevelopment and Central Boulevard greenfield site.

New coworking setups could also drive future net absorption.

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