Singapore’s premium office space seen to be cost effective

Rental on office space are forecasted to remain firm until at least 2022, according to a recent Bloomberg report ‘Singapore Office Landlords Get Upper Hand as Rentals Jump’.

At the back of accelerating demand and dwindling supply, rental rates for office space in Singapore’s prime business districts have risen at the steepest pace in more than four years.

According to URA’s release of 3rd Quarter 2018 real estate statistics, rental index for Office market saw a jump of 2.5% over previous quarter.

Relatively, a report by real estate consultancy JLL in December 2018 on ‘Premium Office Rent Tracker’ ranked Singapore in 10th position, as compared to 14th a year ago.

JLL was quoted as saying Singapore is a “cost-effective office location” as this same report has Hong Kong remaining at top position for fourth year running.

“Singapore stacks up very competitively given that it is a global hub for multiple high-value industries and offers a high-quality standard of living, yet is cheap relative to other global hubs,” said JLL Singapore’s head of leasing Chris Archibold.

“The net result of this is that we are seeing expansion across multiple sectors, including a marked increase in demand from the technology sector,” he added.

Singapore continues to attract international firms to set up regional headquarters, and thus rental demand for office space remains strong.

In line with Singapore Government’s Concept Plan of bringing jobs closer to home, strata-titled office space at commercial buildings are being developed at various decentralised locations.

For businesses that require a smaller-sized office space, recent office buildings have unit sizes that cater to their needs in such office space.

This also creates opportunities for investors looking to commercial space as it does not attract ABSD (“additional buyer stamp duty”) which is applicable if you invest into a residential apartment.

Current strata-titled office space that investors can consider are The Central at Clarke Quay, SBF Center, Vision Exchange or Paya Lebar Square.

 

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