Office occupancies and rentals in Singapore fell sharply in the first quarter of 2009, according to latest figures from property consultancy DTZ.
DTZ said the data showed that companies continued to consolidate space and put expansion plans on hold in the wake of the global financial crisis.
According to DTZ, office rents slid 18 per cent on average island-wide. This was the steepest decline since the third quarter of 1998, when rents fell by 12 per cent during the Asian Financial Crisis.
DTZ said monthly rental for prime office space in the Central Business District dropped 25 per cent to an average of S$12 per square foot (psf).
The report also indicated that average office rents fell most sharply at the Tampines Finance Park, dropping by 32 per cent to S$5 psf, as new supply of space becomes available.
Office occupancy also registered the largest quarterly decline since the third quarter of 1997, with a 2.1 percentage point fall to 93.6 per cent.
DTZ said the office market faces an impending supply glut, with some 2 million square feet of office space due to be completed later this year. This will further put pressure on rentals and landlords are expected to step up efforts to fill these new developments.
The industrial property market also saw further weakening in the first quarter, with a seven per cent drop in average rent as a result of shrinking demand. This compared with the three per cent fall in rentals in the last three months of 2008.
DTZ said the outlook for the industrial market seems bleak, with the economy showing no signs of bottoming out.
In addition, industrial REITs players are also staying away from acquisitions, as they focus on sustaining and improving occupancy levels in their current portfolio.
Source : Channel NewsAsia – 1 Apr 2009