Rental Rates & Activity

• After an economically strong 2010 in Singapore, many companies across industries were able to take advantage of the lower, more attractive rental rates within the commercial real estate market.
• Whilst 2010 saw rental rates rise at a good pace, the first quarter of 2011 illustrated a steadier, controlled increase - although rents are still on the rise. Average Prime Rents are currently at S$9.00psf pm with Grade A rentals averaging S$10.40psf pm with Grade A New Developments achieving well into the double figures in rent.
• Landlords are more bullish at present and are confident that rentals will gradually increase in the coming months due to the continued demand for centrally located quality office buildings.
• New Developments are still attracting a lot of interest from occupiers, not only because of the world class Grade A specifications they offer, but they are also offering relatively competitive rates in comparison to other regional office locations.
• The take-up was strong within the New Developments of 2009 (Straits Trading Building, Mapletree Anson & Twenty Anson), and 2010-2011 (MBFC, 50 Collyer Quay, OFC, Asia Square) and the last units within some of these developments look like they will be pre-leased easily within 2011.
• There seems to be a healthy number of occupiers coming into the core CBD from locations in Singapore, Regionally and Globally.
• Shipping, Oil & Gas, Recruitment and Financial sectors appear to be very active in the office leasing market at present.
• It is fair to say that the leasing transactions have slowed within the larger occupier range of 30,000 - 300,000sf+ as the majority of the space within the new office towers has already been signed up. However the transactions below 30,000sf are still active with expansions and relocations within Singapore, as well as relocations to Singapore 

Supply & Demand

• 3.1 million square foot of new Grade A office space coming online in 2011 the majority of which has been pre-leased due to the demand for quality developments.
• The vacancy rates were up slightly in Q1'11 compared with the end of 2010, but a lot of this is due to secondary space being returned to the market by the movement of occupiers to the New Downtown developments. A lot of the secondary space is of good quality and it is expected that the demand is sufficient to fill this space.
• MBFC Towers 1 & 2 are now 100% leased and OFC over 90% pre-leased, the New Developments continue to be in high demand. Occupiers that have not yet secured Grade A space may look to secure it in Asia Square Tower 1 or One Raffles Place, all due for completion in 2011. MBFC Tower 3 will be completed in 2012 and Asia Square Tower 2 in 2013.
• The demand coming from occupiers is consistently for quality, as has been illustrated by the level of take up in the New Developments. This is also reflected in the scheduled redevelopment of the older office buildings - upgrading the developments to offer occupiers a high quality of build as well as for Landlords to retain a competitive edge. 

Forecast

• The demand continues to gather momentum and remains strong. Occupiers now have a clear view of their internal budgets, head counts and growth strategies for the future, meaning that they are in a position to take advantage of the relatively low rents while they can.
• Rents look like they will continue to rise gradually throughout 2011 up some 10-15%. It should be noted that these rates are still attractive and competitive within the region, and the quality of office build Singapore offers is very high. 
• 2011 continues to be an opportune period for Tenants to be committing to long-term leases before the affordability diminishes. There are some exciting new developments coming online offering world class building specs and facilities.
• Rental Rates may creep up, but they are still well below the highs of 2007-2008.  

Rental Snapshot

Please note the below rates are asking prices only and are subject to negotiation.

RAFFLES PLACE
December 2011 - Rental Range - $6.50 - $12.00psf pm