The office property market in Singapore is bottoming out and the declining rentals are now stabilising, according to data released by Jones Lang Lasalle.
This is in contrast to the average Prime Grade A gross effective rent in the CBD area, which has declined by 0.6 percent on quarter to $7.75 psf each month during the first quarter.
Office rents in the country have been declining since Q3 of 2008. JLL said that the return of market activity from Q4 last year continued to be instrumental in bringing rental rates closer to their bottom.
Most landlords in the office sector were also able to maintain their rental rates.
In terms of demand, JLL said that office vacancy rates had declined in the first quarter of 2010 in the several key market segments, including Prime Grade A offices, where it dropped three percent in Q1 this year from four percent in Q4 2009.
These outputs are mostly attributed to the success of several prominent Prime Grade A office buildings such as UOB Plaza 1, One George Street, Capital Square and Republic Plaza in terms of reducing vacancies and securing tenants.
Looking ahead, JLL said that with the increasing competition among landlords and the potential oversupply of office space, the high-end segment of the office market will be able to command premium over existing older buildings as demand finally returns to the market.