Office rentals forecast to drop at least 5%

This as 3m sq ft of office supply will come against an estimated 1.5m sq ft of net absorption in FY13.

OCBC Investment Research noted:

Base case: office rentals and capital values to fall 5-10% in FY13. In our base case, we expect vacancy levels to remain steady over FY11-12 before spiking in FY13 when 3m sq ft of office supply comes against an estimated 1.5m sq ft of net absorption. We forecast office rentals to dip 5% and 8% in the central and fringe regions respectively in FY13. Historically, capital values are more volatile and we estimate capital values in the central and fringe areas could fall 8% and 10%, respectively.
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