Singapore prime office rents’ nosedive to extend until 2017

It could further dip by as much as 14%.

The future remains gloomy for Singapore's prime office rents, as a recent study revealed that the city-state's rents may decline up to 14% from 4Q15 to 4Q19—the weakest growth prospect among surveyed markets in the Asia Pacific region.

According to a study of 31 global cities across the world by Knight Frank, a huge part of the blame lies with Singapore's available space.

"In many ways the weakest projections come down to supply, with Kuala Lumpur, Beijing and Singapore markets all seeing a significant amount of new supply come to the market that new demand is being challenged to absorb," noted Nicholas Holt, Head of Research, Asia Pacific, Knight Frank Asia Pacific.

Moreover, Singapore's six consecutive quarters of decline will likely be extended due to the one-two punch of economic headwinds and cautious business sentiment. Alice Tan Director and Head of Consultancy & Research, Knight Frank Singapore, asserted that the flood of about 6m sqft GFA of office spaces island-wide for 2016 and 2017 are envisaged to weigh on rentals in the short term.

On the bright side, 2018 is expected to bring a glimmer of hope to the beleaguered market.

“Beyond the near-term pressures, the medium-term prospect for the office market is expected to improve beyond 2018 as new supply tapers off substantially and demand potentially supported by Singapore’s rising status as a key global financial and business hub," Tan stated.

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