Singapore’s Office Price Index rose 5.7% for the whole of 2018, compared to a 2.4% decline in 2017, according to URA’s real estate data released on Jan 25.
“With [the] Office Price Index rising for six straight quarters, accumulating a total gain of 8.9% from the trough in 2Q2017, office prices are just 0.07% away from the all-time high in 2Q2015,” points out Christine Li, senior director and head of research at Cushman & Wakefield Singapore.
The recent residential property cooling measures have diverted institutional investors’ interest from the residential sector to the commercial space, says Li. The “office sector will remain a star performer in 2019”, she adds.
Demand was concentrated in Downtown Core, which accounted for more than 90% of the total space absorbed in 2018 (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Meanwhile, rents increased 0.5% q-o-q in 4Q2018, and rose by 7.4% for the whole of 2018. “The increase in office rents in 2018 was supported by limited supply in the CBD and strong demand from both co-working operators and technology firms,” says Calvin Yeo, executive director and head of office advisory at Knight Frank Singapore.
Full-year 2018 net absorption nearly tripled to reach a six-year high of 172,000 sqm (1.85 million sq ft) from the 60,000 sqm (645,840 sq ft) absorbed in 2017, says Tay Huey Ying, JLL head of research & consultancy, Singapore. Demand was concentrated in Downtown Core, which accounted for more than 90% of the total space absorbed in 2018. Grade-A office rents stood at $10.16 psf per month at the end of 4Q2018, notes Tay.
Demand came from a broad spectrum of industries ranging from technology and business services companies. Co-working operators remained a key demand driver with 4Q2018, especially following the entry of Hong Kong-based co-working player Campfire Collaborative Spaces taking up 85,000 sq ft at 139 Cecil Street – regarded as “one of the largest single-site co-working centre in Singapore to date”, notes JLL. It also Campfire’s largest co-working site globally.
Outlook appears “positive” for the next couple of years, says Desmond Sim, CBRE head of research. “Demand is steady while supply is tapering,” he adds. “Interest for upcoming projects is fairly strong with some notable pre-commitments already executed in 2019 and 2020.”