Published February 11, 2010

S'pore office rents down 46.2% in Q4 '09

It's biggest fall in Asia-Pac, widening S'pore's rental gap with HK, Tokyo


TOKYO, Hong Kong and Singapore remained the three most expensive office locations in the Asia-Pacific in the fourth quarter of 2009, according to a report from Colliers International.

But Grade A office rents in Singapore suffered the biggest fall in 2009 across all Asia-Pacific markets tracked. Rents here slid 46.2 per cent from Q4 2008, Colliers says in its latest Asia-Pacific office market overview.

Rents fell 24.2 per cent year on year in Hong Kong and 19.5 per cent in Tokyo.

'Because of the steeper fall in Singapore, the gap in rents between Singapore and Tokyo and Hong Kong widened to 88.5 per cent and 46.7 per cent respectively in Q4 2009,' said Colliers' director of research and advisory Tay Huey Ying.

In Q4 2008, rents in Singapore were 32.1 per cent lower than those in Tokyo and just 7 per cent shy of Hong Kong.

On the other hand, the cost of occupying Grade A office space in Singapore versus cities such as Sydney, Ho Chi Minh City, Perth, Mumbai and Delhi has narrowed. Occupancy costs in Singapore were 30.3 to 115.1 per cent higher than those in these cities in Q4 2008, but the difference has fallen to 3.1 to 29.1 per cent in the past year.

'This has greatly increased the competitiveness of Singapore vis-a-vis the rest of the region,' said Ms Tay. 'With the Asia-Pacific leading the world out of recession, the competitive office rents in Singapore are now a compelling reason to invest or locate operations here.'

In general, office leasing markets across Asia-Pacific are bottoming out. The pace of rental decline narrowed to less than one per cent quarter on quarter in Q4 2009.

Colliers attributed this to strong rents in cities such as Hong Kong and Chengdu, where the supply of new space remained tight and demand increased.

In Singapore, office leasing activity increased in Q4 2009 as businesses started to prepare for the upturn. Rents declined just 0.4 per cent from Q3.
Looking ahead, average office rents in the region are expected to grow again towards the end of 2010, Colliers said.