Hong Kong, Singapore and Tokyo were still the top three most expensive office locations in the Asia-Pacific region during Q4 2009, according to Colliers International.
However, Singapore’s Grade A office rents suffered a huge decline last year across all Asia-Pacific markets. Grade A office rents in the country plunged 46.2 percent from Q4 2008, according to the latest Asia-Pacific office market overview released by Colliers.
Office rents declined 19.5 percent year-on-year in Tokyo and 24.2 percent in Hong Kong.
“Because of the steeper fall in Singapore, the gap in rents between Singapore and Tokyo and Hong Kong widened to 88.5 per cent and 46.7 per cent respectively in Q4 2009,” said Tay Huey Ying, director of research and advisory at Colliers International.
Singapore office rents in Q4 2008 were down 32.1 percent compared with Tokyo and 7 percent than in HK.
However, the occupancy cost of Grade A office space in the country has narrowed compared with those in Sydney, Mumbai, Delhi, Perth and Ho Chi Minh City. The Grade A office space occupancy cost in Singapore in Q4 2008 was 30.3 to 115.1 percent higher than those cities, but the gap has dropped to 3.1 to 29.1 percent this year.
“This has greatly increased the competitiveness of Singapore vis-a-vis the rest of the region,” said Ms. Tay. “With the Asia-Pacific leading the world out of recession, the competitive office rents in Singapore are now a compelling reason to invest or locate operations here.”
Overall, the office leasing markets in the Asia-Pacific region are bottoming out. The rate of rental decline has narrowed to less than one percent in Q4 2009 quarter-on-quarter.
Colliers attributed this to strong rental rates in cities like Chengdu and Hong Kong, where new office space supply remained stable and demand increased.
Office leasing activity in Singapore rose in the fourth quarter last year, as more business began to prepare for the upturn. Rental rates declined only 0.4 percent from the third quarter.
Looking ahead, the average office rents in the Asia-Pacific region are expected to increase by end-2010, said Colliers.