Singapore CBD 8th Costliest Office District In The World
At S$11 per sq ft (psf) per month, or US$103 psf per year, the extended central business district comprising Raffles Place and Marina Bay is the eighth most expensive office area in the world, according to a property consultancy firm’s study.
Taking into account quoted rents from only premium office space in top sub-markets, Singapore was inched out by other Asian locations such as Hong Kong’s Central which commanded rents of HK$105 psf per month (US$162 psf per year) and Beijing’s Finance Street where corporates paid rents of 750 yuan per sq m per month (US$137 psf per year). Hong Kong and Beijing snagged second and third places, respectively for the most expensive office areas in the world. The top spot, St James’s in London, cost £125 psf per year, or US$194 psf per year.
The firm expects the same set of global cities to continue to dominate the list in the years to come, although the order will change with sector-driven market conditions and the continued rise of the technology and mobile sectors.
On the demand side, the islandwide office market saw net increase in occupied space of about 495,000 sq ft in Q3, higher than 205,000 sq ft in Q2, notes Colliers International’s director of research and advisory Chia Siew Chuin.
The property consulting group’s research also showed that office rents have embarked on a firm recovery path. “In particular, the rate of increase for average monthly gross rents for Premium Grade office space in the Raffles Place/New Downtown micro-market accelerated to 3.3 per cent in Q3 2013 from the 2 per cent Q-on-Q rise in the preceding quarter.
“This brought the average gross monthly rent for premium grade office space in this micro-market to $9.92 per sq ft by the end of September 2013,” said Ms Chia.
URA’s All Industrial rental index rebounded 4.4 per cent in Q3 after dipping 0.1 per cent in Q2. Its multiple-user factory rental index increased 4.4 per cent in Q3 after inching up 0.1 per cent in the second quarter. Multiple-user warehouse rents recovered 4.6 per cent in the July-September period from the 2.4 per cent decline in Q2.
“The upside in rents was generally supported by lease renewals and higher rents sought by landlords who have paid high prices for their properties in recent years,” said Ms Chia.
At the same time, vacancy rates eased slightly to 7.5 per cent at end-Q3 from 7.6 per cent at end-Q2 for factory space and to 6.7 per cent from 7.2 per cent for warehouse space, according to URA’s data.
URA’s shop rental index climbed 0.4 per cent in Q3, contrasting with a 0.8 per cent slide in Q2. The shop price index, however, appreciated at a slower clip of 0.4 per cent in the third quarter, compared with the 1.7 per cent increase in Q2. In similar fashion, the price index for office space rose one per cent in Q3, compared with Q2’s 1.5 per cent gain.
Prices of multiple-user factory space continued to inch up 0.9 per cent after posting a 0.5 per cent gain in Q2. “The slower pace of price growth in this segment was likely due to supply pressures, buyers’ resistance towards further price hikes and the overall slowdown in market activity arising from the total debt servicing ratio (TDSR) requirements,” said Ms Chia.
Multiple-user warehouse space posted the most dramatic turnaround, rising 10.4 per cent in the third quarter, after slipping 5.9 per cent in the previous quarter.