Archive for category: Misc

URA’s quarterly report on Jan 25 showed that Singapore’s office property market ended 2023 on a subdued note. Commercial office prices for 4Q2023 dropped 5.9% q-o-q, reversing the 0.8% q-o-q uptick in 3Q2023. 2023 closed with a net decrease of 4.2% in office prices.

“JLL had started to observe weakening occupier demand as early as 2Q2023”, says Tay Huey Ying, head of research and consultancy at JLL Singapore. “The downcast global and domestic economic outlook at the start of the year, coupled with the higher-for-longer interest rate environment, had kept occupiers wary and saw many corporates shelving expansion and relocation plans to manage costs.”(Source: URA)

The steep 5.9% q-o-q fall in the URA office property price index in 4Q2023 following three consecutive quarters of lacklustre growth is not surprising considering “the immense asset repricing pressure that has built up arising from the negative yield spread over borrowing costs for most office assets in the prolonged elevated interest rate environment,” adds Tay.

Given the higher capital expenditure and interest rates, some occupiers were renewing existing leases at higher reversionary rents rather than relocating, says Song. She adds that space availability remains “extremely tight due to limited supply”.

Selected premium office space with quality specs in the Core CBD was also highly contested among competing tenants, leading to rental escalation,” says Song. She noted that shadow spaces in prime areas such as Marina Bay and Raffles Place proved attractive to occupiers seeking high-quality, fitted-out office spaces.

Meanwhile, according to Song, some shadow spaces were taken off the market as tech occupiers decided to retain their office premises, further contributing to the shortage. With the lack of supply, based on URA data, the market saw a positive net absorption of 0.1 million sq ft, following the additional 0.25 million sq ft absorption in 3Q2023. The island-wide vacancy was 9.9% in 4Q2023, down slightly from 10% in 3Q2023.

Soft occupier sentiment will likely linger with layoffs announced at the start of the year in giant companies like Lazada, Google, YouTube, Amazon, Tencent Holdings’ Riot Games and even Unilever. “However, experience has shown demand for office space to be capable of a quick rebound on improved economic conditions,” says JLL’s Tay.

Singapore’s economy showed signs of a nascent recovery, based on advanced estimates by the Ministry of Trade on Jan 2, showing 4Q2023 GDP growth of 2.8% y-o-y from 1.0% y-o-y in 3Q2023. “The extension of this recovery into 1H2024 could lift business confidence and unleash pent-up demand in 2H2024,” Tay adds. “Occupiers who have held back on relocation or expansion plans in 2023 could restart new lease negotiation conversations. Should this pan out, office rents could firm and potentially trend up in 2H2024.”(Source: URA)

The market may face a slower 1H2024 with an above historical average completion pipeline in 2024 and potential secondary spaces, which could lend to a temporary increase in the availability of spaces,” notes Song. Sentiment could pick up in 2H2024 as interest rates and inflationary pressures ease.

The lack of supply could potentially lead to further rental escalation and a tightening in office vacancies. Investors waiting on the sidelines are starting to re-enter the market with the end of the Fed rate hike cycle. The successful sale of VisionCrest Commercial in Orchard to the consortium comprising TE Capital Partners, LaSalle Investment and Metro Holdings in November 2023 could pave the way for more office deal-making, thus supporting upside in asset prices by 2H2024. (Source: CBRE Singapore)

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Singapore’s office property market ended 2023 on a subdued note, according to URA’s quarterly report on Jan 25. Commercial office prices for 4Q2023 dropped 5.9% q-o-q, reversing the 0.8% q-o-q uptick in 3Q2023. The full year closed with a net decrease of 4.2% in office prices.

JLL had started to observe weakening occupier demand as early as 2Q2023, according to Tay Huey Ying, head of research and consultancy at JLL Singapore. She attributed this to the downcast global and domestic economic outlook, as well as the higher-for-longer interest rate environment. These factors resulted in many corporates shelving expansion and relocation plans to manage costs.

The steep 5.9% q-o-q fall in the URA office property price index in 4Q2023, following three consecutive quarters of lacklustre growth, is not surprising. Tay explains that this is due to “the immense asset repricing pressure that has built up arising from the negative yield spread over borrowing costs for most office assets in the prolonged elevated interest rate environment.”

On the other hand, Tricia Song, CBRE head of research for Singapore and Southeast Asia, notes that office rents in the Central Region increased just 0.3% in 4Q2023, the lowest quarterly growth for 2023. This followed a 4.9% q-o-q bump in 3Q2023. However, for the full year, office rents were up 13.1% in 2023, faster than the 11.7% increase in 2022.

Song explains that given the higher capital expenditure and interest rates, some occupiers were renewing existing leases at higher reversionary rents rather than relocating. She adds that space availability remains “extremely tight due to limited supply.”

Additionally, Song notes that selected premium office space in the Core CBD was highly contested among competing tenants, leading to rental escalation. She also highlights that shadow spaces in prime areas, such as Marina Bay and Raffles Place, proved attractive to occupiers seeking high-quality, fitted-out office spaces. As a result, some shadow spaces were taken off the market as tech occupiers decided to retain their office premises, further contributing to the shortage.

Based on URA data, the market saw a positive net absorption of 0.1 million sq ft in 4Q2023, following the additional 0.25 million sq ft absorption in 3Q2023. The island-wide vacancy was 9.9% in 4Q2023, slightly down from 10% in 3Q2023.

However, Song adds that soft occupier sentiment is likely to linger due to layoffs announced at the start of the year in giant companies such as Lazada, Google, YouTube, Amazon, Tencent Holdings’ Riot Games, and even Unilever. She notes that experience has shown demand for office space to be capable of a quick rebound on improved economic conditions.

Singapore’s economy showed signs of a nascent recovery, based on advanced estimates by the Ministry of Trade on Jan 2, showing 4Q2023 GDP growth of 2.8% y-o-y from 1.0% y-o-y in 3Q2023. JLL’s Tay believes that “the extension of this recovery into 1H2024 could lift business confidence and unleash pent-up demand in 2H2024.” She adds that occupiers who have held back on relocation or expansion plans in 2023 could restart new lease negotiation conversations, potentially leading to firming office rents and trending up in 2H2024. (Source: URA)

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Holland Drive Condo residents can revel in the perfect blend of old and new at the Holland Road Shopping Centre. This lively shopping destination features a variety of stores, ranging from trendy fashion outlets to electronic and household goods shops. Bargain hunters and those with a penchant for unique finds will surely delight in the diverse selection of goods offered. Amidst the mall’s charming mix of vintage clothing, antique pieces, and quirky boutiques, anyone can find a special something to call their own. Strategically situated and offering a wide assortment of shops, Holland Road Shopping Centre is a must-visit destination for anyone living in the Holland Drive Condo vicinity.

On the other hand, CBRE’s Song notes that the market may face a slower 1H2024 with an above historical average completion pipeline in 2024 and potential secondary spaces, which could lend to a temporary increase in the availability of spaces.

However, sentiment could pick up in 2H2024 as interest rates and inflationary pressures ease. With flight-to-quality and flight-to-green trends expected to continue, CBRE Research projects that Core CBD (Grade A) rents will grow at a moderate pace of 2% – 3% in 2024.

Furthermore, investors who have been waiting on the sidelines are starting to re-enter the market with the end of the Fed rate hike cycle. The successful sale of VisionCrest Commercial in Orchard to the consortium comprising TE Capital Partners, LaSalle Investment and Metro Holdings in November 2023 could pave the way for more office deal-making and support upside in asset prices by 2H2024. (Source: CBRE Singapore)

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– Australia to face a residential shortage of 240,000 units over next five years as population increases: CBRE
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