The recent release of the quarterly figures from the Urban Redevelopment Authority (URA) showed that office rents in Singapore are stabilising. 

Li Hiaw Ho, Executive Director, CBRE Research said,” According to URA statistics, office rents have turned a corner and are no longer falling. Based on leases which had commenced, islandwide office rents rose marginally by 0.4% in Q1 2010. The strong recovery in leasing activity witnessed in the fourth quarter of 2009 continued into the first three months of 2010. Office take-up was a substantial 236,808 sqft on the back of the positive 301,392 sqft in Q4 2009. Island-wide vacancy rose slightly from 12.1% in Q4 2009 to 12.5% in the first quarter of 2010.”

He added that this was probably due to the completion of 630,770 sqft of office space at the Marina Bay Financial Centre (MBFC) Tower 1. However, with the first phase of the MBFC almost fully leased, the increase in vacancy is expected to be transitional. Office take-up should recover to healthy levels in 2010, strengthening further in 2011. 

“While there are compelling signs that rents have stabilised, an early return to rental growth might still be premature. The impending supply of new completions in 2010 which is estimated at 2.72 million sqft as well as a substantial amount of secondary supply from tenants relocating to new mega-schemes, might limit rental recovery until next year. Nonetheless, the cloud of significant over-supply has receded as the Singapore office market has once again displayed remarkable powers of recovery,” Li commented.

Li also noted that the office price index increased by 1.8% in Q1 2010 after increasing 1.0% in Q4 2009.