Dec 16, 2009

Office rents to bottom out

By Joyce Teo, Property Correspondent

RENTALS of popular new prime Grade A office properties look set to bottom out as early as the second half of next year, while rentals of existing office buildings may touch bottom in a year's time, according to the latest report from Jones Lang LaSalle.

Its preliminary estimates show that the average gross effective rent of Grade A office properties in the core of the central business district reached $7.80 per sq ft per month in the fourth quarter, down 4.9 per cent from the third.

Rents in Singapore's office market have been falling as demand slows and supply grows.

Experts expect rents to continue falling into next year, though at a slower pace. Vacancies are still rising as companies take advantage of falling rents to move to better quality office space.

The good news is that activities have picked up lately, with many financial institutions planning for moderate growth.