The office property market in Singapore is picking up, said brokerage company Nomura.
Nomura stated that amid stronger-than-expected demand, office rentals in the country are bottoming out, prompting tenants to commit sooner than expected.
A decrease in occupancy costs, as well as the desire to secure neighbouring expansion or better quality space, has prompted pre-commitments, it noted.
It added that vacancy rate is likely to decline than earlier forecast due to a stronger demand – with 79.9 percent of this year’s supply pre-committed.
The company has also increased its rental expectations by between 5.4 percent and 10.4 percent for Grade A space, as well as between 7.9 percent and 15.4 percent for International Grade A (IGA) space.
On the back of the revisions, Nomura is confident about the sector and increased its price targets for office landlords listed here.
Its top choices are CapitaCommercial Trust, Singapore Land, Keppel Land and K-REIT Asia.
The company is keeping its "buy" rating on Keppel Land and K-REIT Asia, as they are most exposed to the IGA office market.
As for Singapore Land and CapitaCommercial Trust, it said valuations for the two companies remain compelling.