Rentals of office space also rose 1.3% in the same period.
Office prices continued to rise after rising 0.9% in Q1 following a 3% increase in the previous quarter, according to a report by the Urban Redevelopment Authority (URA).
Also read: Office prices jumped 3% in Q1
Rentals of office space also rose 1.3% in the same period, which marks a recovery from the 0.6% decline in the previous quarter.
"This was likely supported by higher rents achieved in newly completed developments that helped push the overall average rents upwards. The positive rental performance continued to support office prices which expanded by 0.9% QoQ. That said, this quarter’s growth of 1.3% was still a slowdown from the previous quarter’s expansion of 3% -- which possibly reflects investors adjusting their outlook of prices in the office segment," Catherine He, associate director of research at CBRE, commented.
Meanwhile, total office supply hit about 732,000 sqm GFA, down by 1,000 sqm from Q1.
The amount of occupied office space climbed 35,000 sqm in Q2, following an increase of 19,000 sqm Q1. The stock of office space edged up 7,000 sqm in the same period, after a 6,000 sqm decline in the previous quarter.
"This healthy take-up could have been contributed by prior commitments in Funan, which gained TOP this quarter, and higher occupancy in recently completed buildings," He said.
As a result, the island-wide vacancy rate of office space declined to 11.5% as at the end of Q2, from 11.8% in Q1.
In a separate report from Edmund Tie & Company, the amount of office supply that is scheduled to be completed in 2019 could reach 704,000 sqft and 734,000 sqft by 2020. In particular, 148,000 sqft of office supply is expected in the Central Business District (CBD).
It added that the majority of the new supply has already been pre-committed, including the 85,000 sqft space in 139 Cecil Street. Fully leased by co-working operator Campfire Collective, the office space is expected to be completed by 2019.
However, He added that the outlook on office spaces looked clouded.
"[A]lthough the current supply situation is relatively tight, pre-commitments of pipeline projects have slowed considerably. These factors combined could potentially dampen rental growth prospects over the medium term," she continued.
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