Raffles Place Grade A office rents up 13.1% in Q2
Rents up 23.2% from Q405; seen rising 12-15% in H2, 15% in 2007
TIGHTENING prime office space and buoyant demand pushed up the average Grade A office rental value in the prime Raffles Place area by 13.1 per cent in Q2 over the preceding quarter, says Colliers International.
The $6.37 per square foot average monthly gross rent in Q2 for the location - which the firm defines as including new developments in the Marina Bay area like One Raffles Quay - is 23.2 per cent higher than the Q4 2005 level.
Colliers predicts a further 12 to 15 per cent increase in the second half of this year, followed by another 15 per cent for the whole of 2007. ‘New supply of good grade office space will remain muted till the completion of the Business & Financial Centre in 2009-10,’ the firm said yesterday.
The average monthly gross rent for Grade A offices in Raffles Place has recovered by 61.3 per cent from the recent bottom of $3.95 psf in Q1 2004. But the latest figure of $6.37 psf is still below the 1996 peak of $9.77 psf, the firm said.
The 13.1 per cent hike in Q2 surpassed the previous quarter’s 8.9 per cent gain and is also the biggest quarterly rise recorded in the past 10 quarters for Grade A office space in Raffles Place.
The property consultancy says that in Raffles Place as well as all major office micromarkets across the island, the second quarter’s Grade A office rents saw their steepest increases since the market bottomed in Q1 2004. ‘Currently, Grade A office stock in Singapore has reached the technical full occupancy rate of above 95 per cent. ‘Good quality office space with large floor plate in excess of 15,000 sq ft is highly sought after. This is evident from the take-up rate of 1.3 million sq ft of office space in One Raffles Quay, which was fully committed way ahead of its completion date,’ says Ms Tay.
‘This has enabled One Raffles Quay (ORQ) to achieve benchmark rentals which swiftly filtered down to the rest of the office market, leading to broad-based rental growth,’ she said.
ORQ, which boasts big-name tenants like Deutsche Bank, ABN Amro, UBS, Barclays Bank, Credit Suisse, Societe Generale and Ernst & Young, is marketed by property consultancy CB Richard Ellis. The development comprises two towers. The first tower was completed in April and the second is slated for completion in October.
‘An example of just how tight the office market is becoming can be seen in Merrill Lynch’s recent leasing commitment to the HarbourFront office micromarket, which includes more than half of HarbourFront Tower 5, which is slated to complete only in late 2008,’ says CB Richard Ellis executive director Moray Armstrong.
Source : Business Times - 20 Jun 2006
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