Rental growth window narrowing for CapitaCommercial Trust

Rent increases will slow down from 2H15.

CapitaCommercial Trust will be hard-pressed to raise rents further starting 2H15, which could dent the firm's robust stock outperformance.

According to BNP Paribas, CCT has outperformed the S-REIT index by 16% in the past 12
months and the positives of the office rent market appers to be mostly priced in.

"We expect 3.6m sq ft of planned new office completions in 2016 to slow down rent increases from 2H15 (e.g. Marina One, Guoco Tower). Grade A market rents rose to SGD11.20 psf at end-FY14, up 15% y-y, and we expect them to rise another 10% by end-FY15. As the average rent of CCT’s remaining leases expiring in 2015 is SGD8.99 psf, and with 12% of gross rental income nearing lease expiry, we expect further reversions to boost rental income," statd the report.
 

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