Singapore office rents the 5th fastest growing globally

The latest evidence of fast escalating office rentals in Singapore is provided by a CB Richard Ellis report which shows that office rents on the island are the fifth fastest growing globally. The report, issued yesterday, compared percentage change in occupation costs over a 12-month period for 176 cities worldwide.

Rents in Singapore jumped 53.6 per cent year-on-year to US$67.97 per square foot per annum (or S$8.60 psf per month) in the study dated May 2007 and based on Q1 2007 data. CBRE’s survey also shows that 90 per cent of the office markets monitored reflected positive growth in the 12 months to Q1 2007.

Abu Dhabi reported the highest year-on-year rental rise globally (up 102.9 per cent), followed by New Delhi (79.1 per cent), Sofia, Bulgaria (62.9 per cent), Edmonton (60.1 per cent) and Singapore (53.6 per cent). Mumbai took the sixth place (45.1 per cent).

The US$67.97 psf annual rental figure for Singapore makes it the 24th most expensive office market globally as of May 2007, up from 37th placing in November last year and 43rd spot in May last year.

London’s West End was the world’s most expensive office market in the latest survey, with annual rental of US$241.22 psf, followed by the City of London (US$165.72 psf), and Tokyo’s Inner and Outer Central Five Wards.

CBRE executive director (office services) Moray Armstrong, while acknowledging that increases in cost base are always going to be an issue for occupiers, reasons that ‘the more immediate concern is the lack of office space, which is placing constraints on business expansion’.

‘I don’t think we are at the pivotal point where Singapore is becoming uncompetitive and businesses are starting to re-think expansion plans. After all, the driver for this strong office demand is an economy that’s performing extremely well and a city that MNCs and international banks are excited about,’ he added.

‘Of course, things could change at some point if exponential rental growth continues unabated. But the government’s policy reaction is already in play - with the Urban Redevelopment Authority’s plans to release temporary office sites, additional office plots and other measures. And the private sector, that is developers and investors, are gearing up to build future offices.’

Singapore still has huge tracts of prime developable land, especially in the Marina Bay area. ‘So its position as an attractive place for accommodating business growth is assured,’ Mr Armstrong reckons.

Source: The Business Times, 25 May 2007