The Office Index shows the average Grade A office rents in the Central Business District area rose 15.9 per cent on-year. Singapore is the only city in the Asia Pacific that saw a double-digit jump.
SINGAPORE: Singapore saw the strongest growth in office rentals during the second quarter of this year, compared to other cities in Asia Pacific. According to the latest Office Index released on Wednesday (Aug 13) by property consultancy JLL, average Grade A rents in the Central Business District (CBD) in Singapore rose by 4.6 per cent on-quarter to US$828 (S$1,000) per square metre per annum. On a year-on-year basis, the increase was 15.9 per cent, the only city that saw a double-digit jump.
JLL said the recovery in demand as well as the limited number of new completed office buildings have lifted landlords confidence, resulting in rental growth.
The 4.6 per cent quarterly growth in office rentals pushed Singapore to the third most expensive spot in Asia Pacific, behind Hong Kong and Beijing. Grade A office rents are most expensive in Hong Kong, rising 0.4 per cent on-year at US$1493 (S$1,900) per square metre per annum in Q2. CBD rents in Beijing came in at US$996 (S$1200) per square metre per annum, similarly rising by 0.4 per cent compared to a year ago.
Dr Chua Yang Liang, JLL's Head of Research for South East Asia said, "The short-term tight supply has given landlords the confidence to push up rents. However with the impending supply coming in 2016, this growth is likely to be clipped by about end 2015. The upside will come from the growth in e-commerce, IT support and FMCG sectors that could continue to grow on the back of heightened consumption in Asia with increasing affluence."
Meanwhile, retail rents in Singapore remained unchanged in the second quarter, due to slowing retail sales and visitor arrivals. Average retail rent in the Orchard area, according to JLL’s Retail Index, was US$4,742 (S$6,000) per square metre per annum. It remained unchanged from Q1, but went up 2.2 per cent compared to the previous year.
JLL said increasingly, retail landlords in Singapore are "focusing on service offerings in a bid to differentiate from the growing e-commerce market”.