Singapore office rentals will likely rise by double-digits this year amid expectations that foreign companies will scale up investments in the city-state given improved economic conditions, according to Keppel Land.
“As the office upturn continues to run its course, property consultants are predicting another year of double-digit rental growth, barring unforeseen circumstances,” said the property arm of the Keppel Group in its latest annual report issued on Tuesday.
It cited estimates made by consultancy firm CB Richard Ellis, which expects Grade A office rents to rise to S$11.50 per square foot per month by the end of this year, up by 16.2 per cent from a year-ago’s S$9.90 per square foot per month.
Still, that forecast is below the S$18.80 per square foot per month rental hit in the third quarter of 2008, just shortly before a global downturn which hurt property prices and rents in Asia’s financial centres.
Keppel Land also said that office take-up in Singapore rose to 1.65 million square feet last year, rebounding from the 0.24 million square feet decline seen in 2009.
“This further validates the trend of growing occupier demand in times of better economic conditions,” it said.
The property firm also dispelled fears of an office glut, noting that “over 95 per cent of new office space in 2010 has been committed”.
“Following the robust leasing activities in 2010, there are concerns as to whether demand can persist for 2011 and beyond. This would be dependent on the economic growth of Singapore and major Asian countries,” the firm added.
Keppel Land reported a record net profit of S$1.04 billion last year, a whopping 273 per cent increase from S$280.4 million in 2009.
This came on the back of brisk sales in the fourth quarter and one-off gain from the sale of its interest in the Marina Bay Financial Centre.
Source : Channel NewsAsia – 6 Apr 2011