The gap continues to narrow with a predicted mild but positive office market rental growth in Singapore and a forecasted “downtrend” till 2023 for Hong Kong.

The office rental premium gap between Singapore and Hong Kong significantly narrowed to 108% in 2020 from 135% in 2015, reported Singapore Business Review (SBR) citing Cushman & Wakefield.

“When we compared the office rental premiums between the two cities in 2015 and looked at which city had a more competitive edge as a choice of regional headquarters location, the rental gap was at 135% in favour of Singapore,” said Keith Chan, Head of Research of Hong Kong at Cushman & Wakefield.

“Five years later, this gap has narrowed to 108%, which creates a positive opportunity for Hong Kong as it becomes more competitive,” he added as quoted by SBR.

The gap peaked at 173% in 2017, when the Singapore market started to recover amid a recovering global economy as well as demand from tech companies and co-working operators, following a drop in office rents in 2015 due to supply glut and weak global economic growth.

Cushman & Wakefield’s Research Head for Singapore Wong Xian Yan observed a “more defined role” in which firms targeting to have more exposure to China would prefer setting up a regional base in Hong Kong, while those looking to capitalize and grow on Southeast Asian markets would turn to Singapore.

Cushman & Wakefield noted that the Singapore office market showed signs of recovery, with positive rental growth seen in Q2 2021 amid demand for quality office space driven by technology as well as investment management firms.

It expects office rent recovery to be mild over the next few years due to reduced structural demand for office space amid the rise of remote working. Nonetheless, it noted that the expected hike in office rents mirrors the growing importance of Singapore as a “hub for stability in an uncertain operating environment and the increased significance of the ASEAN market to corporate occupiers”.

“With the successful roll-out of its vaccination programme coupled with a progressive economic recovery plan, the country has maintained its reputation as a safe and stable investment destination and regional business hub,” it said.

Meanwhile, rents for office space in Hong Kong are forecasted to “downtrend” until 2023, further narrowing the rental gap between the two cities. 

Source: CommercialGuru, 25 August 2021