The office leasing market in Singapore has been subdued in the last couple of months as a result of softening demand and cautious market sentiment, according to the latest Savills office market report.
“Negative fallout arising from the prolonged financial turbulence and global economic slowdown has intensified, resulting in slower absorption of Grade A office space. This has continued to push up vacancy rates and put downward pressure on rents in the CBD,” it said.
After recording vacancies below the five percent mark for five consecutive quarters, vacancy rates in CBD Grade A offices rose 6.1 percent in Q4 2011.
Average rents for Grade A office space was S$8.71 psf per month in Q4 2011, down 1.5 percent from S$8.86 psf in Q3 2011. However, average rents rose 7.8 percent for the whole of 2011.
On the other hand, rents in international-grade office buildings posted a higher decrease of 4.6 percent quarter-on-quarter in Q4 2011.
Due to the softening rents, the capital value of Grade A offices also dropped 3.8 percent from S$2,650 psf in the third quarter to S$2,550 psf in the fourth quarter of this year. On an annual basis, capital values rose 8.5 percent from S$2,350 psf in Q4 2010.
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