Singapore office rents are projected to surge by over 25 percent from 2017 through 2019, leading the pack among Asia Pacific markets and more than twice as fast as downtown Hong Kong, according to Cushman & Wakefield.
The forecasts by the international brokerage paint a picture of rapid rental growth across core Asian office markets over the coming two years. Office rents are expected to climb in nine of 10 regional markets, with the exception being Tokyo, which the agency predicts is set for a 12.4 percent plunge from 2017-2019.
The average occupancy cost for premium and grade A offices in Singapore stood at $80.53 (S$108.54) per square foot per year at the end of 2017. Cushman & Wakefield expects that figure to jump to $88.66 (S$119.50) in 2018 and $100.80 (S$135.86) the following year, equating to 25.2 percent growth over the period.
Tech Drive To Help Fuel Singapore Rents
“You will have all the elements that will foster Singapore’s quick transition to a landlord-favourable market,” commented Sigrid Zialcita, Managing Director of the company’s Asia Pacific Research team to Mingtiandi, citing among factors the “anticipated dearth of new supply in the core business districts” which Zialcita anticipates “to average just over half a million square feet in the next two years.”
That supply equals only half of expected demand with Zialcita estimating that the market has the capacity to soak up a million square feet per year. New leasing demand will be supported by an economic recovery as well as government policies designed to sharpen the country’s edge as a business, financial and technology hub.
“Rated as one of the most innovative economies globally, the office market also remains backed by a battery of longer term initiatives,” Zialcita said, citing in particular the development of a digital district slated to create 28,000 tech jobs.
Hong Kong Premises To Get Much Pricier
In Singapore’s rival to the north, Hong Kong’s core business district, Greater Central, is a comparative laggard in Cushman & Wakefield’s predictions, with anticipated rental growth of 12.5 percent over the the next two years – but starting from a much higher base. Average rent in Hong Kong’s traditional business hub stands at a stratospheric $216.85 (HK$1,694.61) per square foot per year, and is projected to grow to $243.63 (HK$1,903.89) by 2019.
For the city as a whole, average rents are predicted to climb from $141.77 (HK$1,107.88) per square foot last year to $150.63 ($1,177.13) by 2019, an increase of 6.2 percent. Other top performers in the region include Australia’s major markets – Brisbane, Melbourne, and Sydney are projected to grow by 14.1 percent, 9.9 percent and 16.8 percent, respectively.
Beijing could see a 9.8 percent rental boost from $65.85 (RMB 435.9) to $72.28 (RMB 478.4) — outperforming Shanghai, which is set for a relatively sluggish 6.1 percent climb from $47.53 (RMB 314.6) to $50.41 (RMB 333.7).
The data reflects average office occupancy costs for premium and grade A office properties in the downtown business district, as well as relevant new prime centres for the respective markets. Currency conversions are based on December 5, 2017 exchange rates.