Office rents set to rise as new supply shrinks

The Republic’s office rents are set to rebound from their first annual decline in three years as new supply shrinks and more businesses expand, said CapitaCommercial Trust.

Rents in the city are reaching a trough and demand may rise as the country positions itself as a regional business hub, said Ms Lynette Leong, Chief Executive Officer of CapitaCommercial Trust.

Supply for the next three years will be about 0.8 million square feet a year, down from 1.3 million square feet over the past two decades, she said.

“Rents are poised for a recovery,” Ms Leong said. It is “a no-brainer that rents are not going to go down very much further so it’s more when the rents will turn and to what extent”, she added.

CapitaCommercial estimates new demand accounted for 1.5 million square feet to 1.8 million square feet annually in the past three years, Ms Leong said, without giving a forecast for this year.

Singapore’s office rents fell 0.3 per cent in the fourth quarter, extending the decline last year to 1.3 per cent, the Government said on Jan 25.

The figures climbed 8.4 per cent in 2011 and 13 per cent in the previous year, government data showed.

Source : Today – 31 Jan 2013

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