In move to provide more transparency, govt agency releases office rental data by location
TIGHTER SUPPLY: The vacancy rate for office space in the 22 top-end buildings in Category 1, likely to include many of those in Raffles Place such as Republic Plaza, has shrunk to 5 per cent. THE Government has released office rental figures by location for the first time, confirming what the industry already knows - prime office rents have shot up by much more than the rest of the market.
Yesterday, it revealed median rents for two categories of offices: prime office buildings, which are highly sought-after and command high rents, and all other offices on the island.
The Government's prime office category consists of 22 top-end buildings downtown and in Orchard Road, which are fairly new in appearance and have large floor plates. While it did not give any examples, the list is likely to include top-grade buildings like Republic Plaza in Raffles Place.
In these offices, median rents of new leases rose by 13.9 per cent to $10.33 per sq ft (psf) per month in the April to June period.
For the rest of the office market - comprising more than 2,000 buildings that make up 80 per cent of Singapore's office space - median monthly rentals went up by 8.9 per cent to reach a much more modest $4.90 psf.
These lower rents are 'more reflective of the typical rental paid by office tenants in Singapore', the Urban Redevelopment Authority (URA) was quick to note in its statement.
As Singapore undergoes an acute shortage of prime office buildings and growing demand from expanding businesses, office rents have jumped to a level that some fear may threaten the Republic's competitiveness.
And this is why the URA has been anxious to provide more transparency as to exactly how much typical businesses are paying for office space.
Property experts said the URA's rental breakdown more accurately reflects Singapore's tiered office market and makes official data easier to compare with figures published by property firms, who use similar categories.
Yesterday's data also showed that while office rents may be climbing, as a whole they are still nowhere near the top asking rents recently reported in some buildings. At 6 Battery Road, for instance, asking rentals have reached $18.50 psf per month.
'The pace of rental increases has been maintained but may not be as high as the landlords wish us to believe,' said Mr Colin Tan, associate director at Chesterton International. 'But it cannot be denied that rents are increasing...We should be more worried about the future.'
Indeed, the rise in rents is still gaining speed. Across the island, rents were up 11 per cent in the second quarter, on top of the 10.4 per cent increase in the previous three months.
Similarly, prices of offices that are bought, as opposed to rented, are going up. They rose 8.9 per cent in the second quarter, more than double the 4.3 per cent rise in the first quarter.
As office rents and values climbed, vacancy rates dropped across the board. They have now shrunk to 8 per cent, a level not seen since 1996, said property firm Knight Frank.
By office type, vacancies fell to 5 per cent in the prime category, and to 8.7 per cent for the rest of the market.
Market experts expect the office shortage to continue into next year and boost rents and prices further.
The office squeeze has boosted industrial property, which some companies have turned to for cheaper offices. This pushed up prices of multiple-user factory space by 8 per cent in the second quarter, double the 4 per cent rise previously. Rents rose 6.1 per cent, from 4.6 per cent.
As for shops, rents rose by 7.1 per cent in the second quarter, compared to only 1.4 per cent in the first quarter. Prices went up 4.6 per cent, from 1.7 per cent in the first three months.
The URA also gave median monthly rents of shops by location.
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