The Republic is expected to top the rental forecast for Asia Pacific cities, with a 25 per cent increase in office rents from 2014-2019. This is according to a report from property consultancy Knight Frank, released on Wednesday (Sep 24). The increase will push Singapore to fourth place on the Knight Frank Global Cities index, behind San Francisco, Madrid and New York in terms of rental forecast.
The increase in urban living in the world’s top cities will see prime office rents reach record highs by the end of the decade, according to the index, which stated that prime office rents in 15 global cities – of which six are in Asia Pacific – are expected to grow 19.9 per cent over the next five years.
In the report, Knight Frank noted that the restricted supply of new office stock and rising demand for commercial space will see vacancy rates fall in all top 10 cities by 2019. For Singapore, vacant office space is likely to moderate from 10.3 per cent in 2014 to 7.7 per cent in 2019.
Prospects for the Singapore office market are positive in view of anticipated healthy demand from companies looking to set up business and expand in the city state, said Knight Frank. “The fairly modest supply of new prime grade office space over the next few years would sustain prime office rental growth,” said Knight Frank Head of Consultancy and Research Alice Tan.
COSTLY CITIES FOR GEN Y
The consultancy also released its Generation Y Cost of Living Index, which assesses the affordability of global cities for young professionals. Hong Kong was the least affordable city, while Frankfurt topped the list, it said.
Knight Frank added that young graduates in Frankfurt have the most disposable income, with about 60 per cent of their net salaries left at the end of each month, compared to a 4.61 per cent deficit for those in Hong Kong.
Singapore was four places below Hong Kong, with young professionals having 9.91 per cent of disposable income at the end of every month, said the consultancy.
Mr James Roberts, Head of Commercial Research at Knight Frank, explained why new districts around the traditional Central Business District are often a struggle for young graduates who are just starting out on their career. He said: “These districts have developed as vibrant and edgy places to live, which often appeal to the young graduates. However, as the areas gain popularity, there is an increase in the prices too.”
Source : Channel NewsAsia – 24 Sep 2014