However, according to a report released by Colliers International, the country’s competitiveness in office occupancy costs continued to improve, as the gap between rental rates in Singapore and in other major financial centres in the world had widened.
Colliers’ global office real estate review for the second-half of 2009 showed that among 154 cities worldwide being tracked, Singapore ranked 24th as the most expensive office location from June to December 2009, up by two notches from 26th place during the first half of 2009.
Hong Kong remained on the top spot, followed by London’s West End and Tokyo.
Although the country’s ranking rose, the gap between office rents in Singapore and those in rival cities grew bigger. Colliers said that this is because Singapore lags behind in the office market recovery, both regionally and worldwide. Many cities around the world posted gains or saw milder declines in office rents during the second half of last year.
“This phenomenon is to Singapore's advantage,” said Tay Huey Ying, Colliers’ director of research and advisory. “The resultant growth in the gap in office occupancy costs against other key financial centres improves our competitiveness and makes Singapore the choice location for business set-ups.”
She also noted that the gap in office rents between Singapore and Hong Kong had widened, from 45 percent at end-December 2008 to 60 percent in H1 2009 and 67 percent in H2 2009.
While office rents in Singapore continued to fall, the rate of decline has slowed significantly, from 42.3 percent in the first half of 2009 to 6.5 percent in the second half of 2009.
Colliers expects the local market in Singapore to ride with the economic recovery this year, and create a momentum seen in Q4 2009, when demand for office space had expanded by 301,000 sq ft.
In addition, rents for grade A office space in the central business district bottomed out in the first quarter of the year, growing by 0.5 percent quarter-on-quarter to the end of Q1 at $6.38 psf per month, said Colliers.
“The flight to quality, as well as expansion by businesses, can be expected to continue in 2010,” said Ms. Tay. “Barring any unforeseen external shocks, the Singapore office market is expected to see a modest recovery with up to a 5 percent increase in rents in 2010.”
- PropertyGuru.com.sg, 6 Apr 2010
