http://www.businesstimes.com.sg/arch...nts-down-54-q1

Published May 10, 2012

Singapore prime office rents down 5.4% in Q1

Drop is second biggest among 33 Asia-Pac cities: CBRE

By lim wei sheng


PRIME office rents in Singapore fell 5.4 per cent in the first quarter of 2012 from the previous three months, the second-biggest drop among 33 cities in the Asia-Pacific region, according to CB Richard Ellis.

Island-wide Grade A rents stayed on a declining trend, falling 3.6 per cent from the previous quarter to $10.60 per square foot per month.

This was accompanied by a vacancy rate of 7.3 per cent, 57 basis points up from the fourth quarter and 162 basis point higher than a year ago. Vacant stock island-wide now amounts to 3.8 million square feet.

The two-year development pipeline as a percentage of stock for Singapore was roughly equal to the vacancy rate, with a forecast 1.37 million sq ft available in 2012 and 2.83 million sq ft available in 2013.

This was in contrast to cities such as Mumbai and Shanghai, where forecast pipeline figures in 2013 are lower than those in 2012.

Quarterly net absorption in Singapore, a key demand barometer, registered a positive 587,000 square feet, boosted by strong pre-leasing activity such as the high 70 per cent pre-commitment level for the 1.3 million sq ft Marina Bay Financial Centre Tower 3, which came on line in March.

Nevertheless, demand is set to weaken, said CBRE, predicting a drop in net absorption levels based on the firm's projects for the remainder of 2012.

CBRE said: "The widening gap between prime and Grade B rents makes it unlikely that the current rental correction will be as significant as in the aftermath of the global financial crisis in 2008/2009 where Grade A rents fell by 57 per cent."

On a regional basis, the CBRE Asia Pacific Rental Index remained virtually unchanged from the previous quarter, as downward pressure on rents in key markets such as Singapore, Mumbai and Hong Kong were offset by rent hikes in cities such as Beijing and Perth.

The first quarter also saw the introduction of 8.3 million sq ft of new office stock across the region, 33 per cent higher than the 10-year quarterly average.