Market Forecast
March 2017

Top tier market bottoming out – mid tier to soften by a further 10% in next 12 months

 

Average top rental rates are now in the region of $8.50 to $9.50 per sq ft effective. The rate of decline in this prime sector of the market has slowed down significantly and in some cases, such as Guoco Tower, rates are even higher than they were 6 months ago.


Generally we expect top prime rates to soften only marginally, by around 5% during the course of 2017, but they are beginning to bottom out. It will be the mid-tier market that will experience that greatest pressure over the next 12 months and we expect further falls of around 10% during this period in this sector.


There should still be some excellent opportunities for tenants to secure good quality space in the core financial district for around $6.50 to $7.50 per sq ft effective. Even Raffles Place is expected to average around $8.00 - $9.00 per sq ft, down from $10.00 per sq ft a year ago.


In the Marina Bay area we expect that Millenia Tower and Centennial Tower will come under some pressure. Suntec City enjoys a relatively high occupancy rate, so effective rates here may soften only slightly to around $7.50 - $8.00 per sq ft. Out of town locations such as Novena and Alexandra Road are likely to remain popular with average effective rate between $5.50 psf and $6.50 psf.


2018 will be an important year for relocations. This is because there will be a lull in new supply for a couple of years after that, with the next wave of supply not coming on stream until 2020/ 2021.


It will therefore be important for businesses to plan well in advance, which is not easy in this uncertain economic climate but firms should start their reviews this year for their 2018 requirements. Rental cost savings should be easy to find in all locations, whatever a tenant’s business plan may be.

 

Corporate Locations (S) Pte Ltd © 2017. License No. L3010044A  |  Disclaimer  |  Site Map