mr funny
12-08-11, 00:13
http://www.businesstimes.com.sg/sub/news/story/0,4574,451235-1312919940,00.html?
Published August 9, 2011
Office landlords watching economic developments closely
Jones Lang LaSalle sees rental growth moderating in second half
By MINDY TAN
(Singapore)
WHILE landlords remain bullish particularly with regard to Grade A office rents, there is now some concern in the market given the economic events playing out in the US and Europe, says Jones Lang LaSalle in a report on Asia- Pacific office rental.
While Grade A products in Singapore are still generating significant demand, Chris Archibold, head of markets at Jones Lang LaSalle noted that especially in the last week with the fluctuations in the stock market, there have naturally been elevated levels of concern in the market.
He said: 'Overall, the fundamentals in Singapore are pretty strong, and despite the fluctuations in the stock market, as it stands today, we still have a healthy level of demand despite bad news coming out around MNCs (multinational companies) laying off staff globally; mostly because this is counteracted by those same MNCs employing in Asia, especially in Singapore.'
This perceived confidence is supported by the trend of newly completed and upcoming Grade A buildings in the central business district (CBD) continuing to attract strong interest; rents at OUE Bayfront and Ocean Financial Centre having edged up more than 5 per cent since receiving their temporary occupation permit in the first quarter of 2011.
Overall, rental growth in the Singapore office market moderated to a more sustainable rate in 2Q11 on the back of adequate supply being phased in.
The average CBD Grade A gross effective rent increased 1.5 per cent quarter-on-quarter (q-o-q) to $10.15 per sq ft per month in 2Q11, up from $10.00 per sq ft per month in 1Q11.
This translates to a 27.7 per cent year-on-year (y-o-y) increase from $7.95 in 2Q10.
Out of 27 office markets tracked by Jones Lang LaSalle, 15 registered rent increases while the remainder stabilised or recorded small declines.
'Demand for office space in the CBD core remains strong and this has been reflected in the rental growth over the past few quarters,' noted Mr Archibold. 'This is likely to moderate in the second half of 2011 given future supply, but rental growth for 2012 and 2013 should be stronger based on the Singapore market dynamics.'
'However this is very much dependent on how events play out in the US and Europe and how this affects sentiment and future demand,' he qualified.
Looking ahead, Jones Lang LaSalle expects rental increases to continue to be moderated over the next six months as it expects available space in the CBD core to increase by about two million square feet in 2H11, or about 7.5 per cent of total CBD core stock, with about 1.2 million sq ft of uncommitted space in the new developments and 800,000 sq ft of space given up by tenants relocating to the newer buildings.
Singapore remained the third most expensive Asia-Pacific city for office space in the second quarter of this year, behind Hong Kong and Tokyo.
Office rental in Hong Kong continued to power ahead with 6.6 per cent growth q-o-q as a result of both China's continued economic strength, and a supply crunch in Hong Kong.
Chua Yang Liang, head of research for Singapore and Southeast Asia at Jones Lang LaSalle added: 'While the supply crunch in Hong Kong has caused rents to spike to almost double that at Raffles Place, Hong Kong's proximity to China continues to be a big draw for front office jobs. While we expect some relocation to Singapore, we do not foresee a mass exodus.'
Published August 9, 2011
Office landlords watching economic developments closely
Jones Lang LaSalle sees rental growth moderating in second half
By MINDY TAN
(Singapore)
WHILE landlords remain bullish particularly with regard to Grade A office rents, there is now some concern in the market given the economic events playing out in the US and Europe, says Jones Lang LaSalle in a report on Asia- Pacific office rental.
While Grade A products in Singapore are still generating significant demand, Chris Archibold, head of markets at Jones Lang LaSalle noted that especially in the last week with the fluctuations in the stock market, there have naturally been elevated levels of concern in the market.
He said: 'Overall, the fundamentals in Singapore are pretty strong, and despite the fluctuations in the stock market, as it stands today, we still have a healthy level of demand despite bad news coming out around MNCs (multinational companies) laying off staff globally; mostly because this is counteracted by those same MNCs employing in Asia, especially in Singapore.'
This perceived confidence is supported by the trend of newly completed and upcoming Grade A buildings in the central business district (CBD) continuing to attract strong interest; rents at OUE Bayfront and Ocean Financial Centre having edged up more than 5 per cent since receiving their temporary occupation permit in the first quarter of 2011.
Overall, rental growth in the Singapore office market moderated to a more sustainable rate in 2Q11 on the back of adequate supply being phased in.
The average CBD Grade A gross effective rent increased 1.5 per cent quarter-on-quarter (q-o-q) to $10.15 per sq ft per month in 2Q11, up from $10.00 per sq ft per month in 1Q11.
This translates to a 27.7 per cent year-on-year (y-o-y) increase from $7.95 in 2Q10.
Out of 27 office markets tracked by Jones Lang LaSalle, 15 registered rent increases while the remainder stabilised or recorded small declines.
'Demand for office space in the CBD core remains strong and this has been reflected in the rental growth over the past few quarters,' noted Mr Archibold. 'This is likely to moderate in the second half of 2011 given future supply, but rental growth for 2012 and 2013 should be stronger based on the Singapore market dynamics.'
'However this is very much dependent on how events play out in the US and Europe and how this affects sentiment and future demand,' he qualified.
Looking ahead, Jones Lang LaSalle expects rental increases to continue to be moderated over the next six months as it expects available space in the CBD core to increase by about two million square feet in 2H11, or about 7.5 per cent of total CBD core stock, with about 1.2 million sq ft of uncommitted space in the new developments and 800,000 sq ft of space given up by tenants relocating to the newer buildings.
Singapore remained the third most expensive Asia-Pacific city for office space in the second quarter of this year, behind Hong Kong and Tokyo.
Office rental in Hong Kong continued to power ahead with 6.6 per cent growth q-o-q as a result of both China's continued economic strength, and a supply crunch in Hong Kong.
Chua Yang Liang, head of research for Singapore and Southeast Asia at Jones Lang LaSalle added: 'While the supply crunch in Hong Kong has caused rents to spike to almost double that at Raffles Place, Hong Kong's proximity to China continues to be a big draw for front office jobs. While we expect some relocation to Singapore, we do not foresee a mass exodus.'