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Published February 15, 2011

S'pore office rents 3rd highest in region

Tokyo and Hong Kong took the top two spots in Asia-Pacific

By EMILYN YAP


SINGAPORE remained the third most expensive Asia-Pacific city for office space in the fourth quarter last year, even as Grade A office rents on the island continued to climb.

Compared with Hong Kong, Singapore was some 30 per cent cheaper when it came to office occupancy costs.

Colliers International reported these findings in its Q4 office market report yesterday. It found that in Singapore, the average gross rent for Grade A office space in the central business district rose 7.5 per cent quarter-on-quarter to $7.91 per sq ft (psf) per month in Q4.

This brought the full- year rental growth in 2010 to 24.5 per cent.

Nevertheless, office occupancy costs in Singapore were not the highest in Asia-Pacific. Tokyo took the top spot with an annual gross rent of US$105.09 psf.

Hong Kong was a close second with US$105.05 psf, while Singapore was third with US$73.69 psf.

The rental gap between Tokyo and Hong Kong narrowed in Q4, Colliers found.

Rents in Tokyo continued to decline at a slow pace and could come under more pressure this year as a large supply of new buildings will be completed.

In contrast, rents in Hong Kong had risen. As at November, the average Grade A office rent in Hong Kong was around 8.5 per cent higher quarter-on- quarter in HK dollar terms.

Overall leasing demand in Hong Kong remained strong 'thanks to the sustained expansionary demand attributed to existing financial tenants, and new demand from a number of private equity and overseas legal firms', Colliers said.

Singapore's office occupancy costs were almost 30 per cent lower than Hong Kong's. As a result, Singapore 'maintains its competitiveness against its closest rival'.

Colliers believes that prime office rents in Singapore could climb by 15-20 per cent in 2011, even with an estimated 2.1 million sq ft of space entering the market.

'The supply situation remains healthy, since about 50 per cent of the new space has been pre-committed,' it said.

At the same time, Colliers sees demand for office space growing. 'The expected robust performance of the services industry in Singapore in 2011 could result in expansions of firms and new set-ups,' it said.

The major cities of China were not in the top 10. Shanghai was the 12th most expensive city in Asia- Pacific for office space, followed by Beijing and Guangzhou in the 14th and 19th spots respectively.