Office space prices and rents in the Central Region increase 0.9% and 1.3% respectively in Q2 2021. 

Prices of office space in Singapore’s Central Region increased 0.9% in the second quarter of 2021, reverting the 2.7% drop registered in the previous quarter, according to Urban Redevelopment Authority (URA) Q2 2021 Price Index data.

Meanwhile, office rents within the Central Region also increased 1.3% in Q2 2021, although this is slower compared to the 3.3% growth seen in the previous quarter.

“Median rents of quality Category 1 office space rose in the quarter, while that of Category 2 office space fell, reflecting the ongoing preference by occupiers for quality spaces,” said Lam Chern Woon, Head of Research and Consulting at Edmund Tie.

URA revealed that there was a total supply of about 697,000 sq m gross floor area (GFA) of office space in the pipeline as of end-Q2 2021. This is lower than the 761,000 sq m as at end-Q1 2021.

The amount of occupied office space declined by 23,000 sq m net lettable area (NLA) in Q2 2021, compared with the contraction of 19,000 sq m in the previous quarter. Meanwhile, the stock of office space rose by 34,000 sq m NLA in Q2 2021, after dropping 9,000 sq m in the previous quarter.

With this, the island-wide vacancy rate for office space grew to 12.6% as at end of Q2 2021, from 11.9% in the previous quarter.

Lam, however, noted that the continued growth of office rents indicates that “there are pockets of strong leasing demand by various sectors such as technology and wealth management”. The Fringe Area, or Rest of Central Area (RCR) for instance, witnessed demand increase to 11,000 sq m in Q2 2021 from 7,000 sq m in Q1 2021.

Over at the retail front, prices contracted 2.8% in Q2 2021, following the 3.2% drop in Q1 2021.

Rents for retail space also declined 0.5%, compared with the 4.4% decrease seen in the previous quarter.

As of the end of Q2 2021, “there was a total supply of 419,000 sq m GFA of retail space from projects in the pipeline, compared with the 428,000 sq m GFA of retail space in the pipeline in the previous quarter”, said URA.

The amount of occupied retail space grew by 14,000 sq m NLA in Q2 2021, while the stock of retail space increased by 18,000 sq m NLA.

With this, the island-wide vacancy rate of retail space remained stable at 8.5%.

Source: CommercialGuru, 23 July 2021