According to some of the latest figures on the Asia-Pacific office market, the costs associated with signing up to rent office space in Singapore fell sharply last year.
A report on the subject from the property advisory giant Cushman & Wakefield (C&W) suggests that average asking prices on prime office space in Singapore dipped by as much as 16 per cent during 2012.
The fall might well make Singaporean office space more appealing for regional and globally active businesses, particularly given that offices in Hong Kong’s central business district tend to be much more expensive. In fact, C&W estimates that offices in Hong Kong’s CBD now have average asking prices twice as high as those in comparable space in Singapore.
C&W expects that the costs of renting offices in Singapore will bottom out later in 2013 and pick up towards the end of this year and into next.
“Singapore’s rent ranking globally and regionally slipped in 2012, which is emblematic of conditions in other financial centres in the region,” wrote Sigrid Zialcita, managing director of C&W’s research team in the Asia Pacific region.
“The combination of below-trend leasing activity and relatively elevated vacancies in super-Grade A space have kept rents on a downtrend over the past year, and among the lowest compared to other financial centres including Hong Kong, Tokyo, Sydney and Shanghai.”
Another piece of expansive research and analysis released by C&W recently placed London’s West End at the top of a list of the world’s most expensive office space markets. For the first time since 2008, the London district went ahead of Hong Kong’s CBD on the list.
Editor’s Notes: In April 2023, office rental rates in Singapore were at S$10.83 per square metre per month which converts to £6.56 per square metre per month (April 17th).
Prime office rent in Singapore had increased by approximately 1 per cent every quarter as it had done during 2022.
More and more employees were returning to the office as fewer companies were committing to a hybrid working model. Productivity has become a priority in view of a deteriorating global business environment and the recent collapses of Silicon Valley Bank and Credit Suisse have created further jitters.
That being said, it is expected that Singapore will remain resilient and stable, partly due to its ability to swiftly adapt policies in reaction to global economic conditions.
Companies, that are welcoming their employees back to the office are increasingly seeking good quality office space. This flight to quality is reflected by the occupancy rate of prime offices in the CBD of 94.1%.
It should be noted that some of this space is not physically occupied. It is more accurately described as ‘shadow office space’ which is leased office space that is not occupied. The decline in the technology sector has led to an increase in this kind of space in 2023.
It is also noted that there is an increased demand for flexible office space in Singapore. As an example, the Guoco Midtown mixed-use development that was completed in January 2023, offers a mix of shared communal facilities and amenities such as a pool, sky park and other leisure facilities as well as a hotdesking hub.
This type of fitted, flexible and scalable office space has become increasingly popular with businesses seeking swing space, for instance, as well as those seeking office space with little to no upfront capital expenditure.