Office rents higher in Q4

Office rents rose at a faster pace in the fourth quarter, but may slowdown next year until recovery in the US and Europe gather momentum, real estate consultant DTZ Research said.

It said average prime gross rents in Raffles Place rose 7.1 per cent on quarter to S$9 per square foot per month, from a 6.3-per cent rise in the previous quarter.

For the whole of 2010, average prime gross rents in Raffles Place have increased by 13.9 per cent, DTZ said in a press release.

Park Regis and Solaris were completed in the quarter, bringing the new supply for the full year to 2.4 million square feet.

DTZ added that island-wide office occupancy rose by 0.5 percentage point on quarter and 3.7 percentage points on year to 95.4 per cent.

The net absorption of office space for the whole of 2010 is estimated to be about 4.4 million square feet, which includes about 1.7 million square feet of pre-committed space.

Excluding the pre-committed space, which is being fitted out, the net absorption will be 2.7 million square feet and occupancy rate will be 92.7 per cent.

DTZ South-east Asia Research head Chua Chor Hoon said that while there was substantial amount of new completion next year, they would be mitigated by the removal of an estimated 0.8 million square feet of existing buildings for redevelopment.

“We project rents to move up at a slower rate next year until there are clearer signs of a recovery in the USA and Europe, as this is still holding back widespread expansion, particularly among occupiers whose headquarters are based in these major economic regions,” she said.

Source : Channel NewsAsia – 29 Dec 2010

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