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SG Office market activity still cautious

Property Here - Wednesday, December 04, 2013

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On-going corporate caution resulted in subdued leasing activity in Asia Pacific's Tier 1 office markets in the third quarter this year, according to a report from Jones Lang LaSalle.

The study noted that while take-up rates of Grade A office space has slowed in most markets, particularly in the financial centres of Singapore and Hong Kong, positive take-up was seen in Tokyo and across the emerging economies of Southeast Asia.

Net effective rents moderated in Q3, with 11 of the 27 markets monitored posting quarterly increases, while the remainder either stabilised or declined. Although this caused rents to fall 0.2 percent quarter-on-quarter, growth was still up 0.8 percent on a yearly basis.

Jakarta again recorded the highest quarterly and annual rental increase across the region at 4.4 percent and 33 percent respectively. 

The major financial centres of Singapore and Tokyo also saw rents increase by 1.1 percent and 0.9 percent respectively, while rents in Hong Kong stayed flat at 0.2 percent in the quarter. 

Jeremy Sheldon, Managing Director for Markets at Jones Lang LaSalle, said: "We have started to see the beginnings of more new activity and positive sentiment in the market, particularly in the core financial centres."

"In Singapore, we have just witnessed the first deal of over 100,000 sq ft completed in the CBD since mid-2011, while Hong Kong is experiencing a similar uplift. Banks are becoming more optimistic, particularly the medium-sized occupiers and the Chinese banks with most insurance groups also looking to expand."

He noted that the trend is particularly prevalent in China and India where demand for office space is now showing positive upward movement.

"We believe that this may be the first signs of some occupier confidence returning to the market as we move into 2014," he added.