Singapore’s commercial property market slumps

Tuesday, 05 May 2009

Adley Low

Asia’s financial powerhouses, Singapore and Hong Kong, suffered the steepest decline in rentals in the first quarter of this year, according to CB Richard Ellis (CBRE).

Singapore suffered the steepest decline in rentals among all Asian markets in the first quarter of this year with a record 18.6 percent drop in rents.

In Hong Kong, overall office rents declined by 14 percent quarter-on-quarter although CBRE said its vacancy rate was less than what they had expected with availability in office space remaining tight.

While rents were falling in most of Asia, one exception was Seoul where face rentals were revised slightly upwards.

Overall office rents in Asia fell 7.9 per cent quarter-on-quarter in the first three months of the year, accelerating from a 7.3 percent decline in the previous quarter.

According to CBRE, overall rentals have now declined 18.5 percent from their peak in the second quarter of 2008.

While demand for office property shrank considerably across the region, CBRE said a rise was recorded in 15 of the 17 markets tracked.

Beijing, Shanghai and Guangzhou continued to record the highest vacancy levels in Asia due to the oversupply problem in China.

Meanwhile vacancy remained below 5 percent for Grade A office buildings in Singapore, Tokyo and Seoul, where supply continued to be limited.

CBRE expects the market outlook remains challenging with a decline in rentals expected to continue and leasing activity will begin to pick up.

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