The Singapore office property market appears to be bottoming out and the trend of falling rents is stabilising, according to data from consultants Jones Lang Lasalle.
This is even though its preliminary estimate of average Prime Grade A gross effective rent in the central business district declined marginally by 0.6 per cent on quarter to S$7.75 per square foot per month in the first quarter.
Office rents have been on a declining trend since the third quarter of 2008.
Jones Lang LaSalle said the return of market activity from the fourth quarter last year continued to be instrumental in bringing rentals closer to their bottom.
Most landlords in the market were able to maintain their rentals.
In terms of demand, Jones Lang LaSalle said vacancy has dropped in the first quarter of this year in several key market segments.
These include Prime Grade A offices where the vacancy rate dropped from about four per cent in the fourth quarter last year, to about three per cent in the first quarter of 2010.
These mostly resulted from the success of prominent Prime Grade A office buildings such as Republic Plaza, UOB Plaza 1, Capital Square and One George Street in terms of securing tenants and reducing vacancies.
Going forward, the consultant said with the potential oversupply of office space and increased competition amongst landlords, the high end segment of the office market will be able to command premium over existing older buildings as demand finally returns to the market.
Source : Channel NewsAsia – 24 Mar 2010