S'pore office rents up 7.9%

SINGAPORE office rents and capital values notched up the third fastest growth out of 26 markets in the Asia-Pacific region in the first quarter.

A new industry report found that rents grew by 7.9 per cent compared with the previous quarter, supported by a temporary shortage of office space.

Office capital values climbed 4.5 per cent from the preceding quarter.

Singapore's performance in the office sector was markedly better than the average for the region.

Across the Asia-Pacific, average rental growth was 2.5 per cent, while quarterly rises in capital values were 3.1 per cent.

Jarkata recorded the largest quarterly rental growth of 9.5 per cent, with landlords more aggressive in raising rentals due to strong take-up rates.

The Japanese earthquake was shown to have had little impact on the occupier market conditions elsewhere in the region, said the report compiled by property consultancy Jones Lang LaSalle (JLL).

The report also detailed a slide in vacancies as office rentals continue to rise across most markets in the first quarter.

The strongest performer in terms of capital values was Hong Kong, recording a 42 per cent jump in prices on the back of strong buying activity, largely fuelled by local investors.

Looking ahead, JLL expects leasing demand to remain solid throughout the Asia-Pacific region for the rest of this year. But the expected addition of fresh office supply is expected to result in a rise of vacancies over the next few quarters.

In view of recent events, JLL's outlook on Tokyo is muted, with the report forecasting an annual decline of up to 5 per cent due to further delays in the recovery of its office market.

Landlords across the region can look forward to rental growth of up to 30 per cent this year, the report said. The strongest growth is set to be seen in markets where supply is limited.

JLL said the markets most likely to record the largest growth include Singapore, Hong Kong and major cities in mainland China.

The report also predicts that almost all markets outside North Asia are set to record strong gains in capital values of up to 35 per cent this year.

These gains will be achieved as rentals steadily head north and as investor confidence improves.

The data was compiled by JLL as part of its quarterly office index.

Source By - The Straits Time Singapore