Grade-A office rental in the Central Business District continued to decline by 5.1% quarter-on-quarter to $9.84 psf per month in 3Q2020, says Cushman & Wakefield (C&W) in its report on the office rental market in the real estate industry..
The expansion of Chinese tech firms in Singapore comes in the wake of geopolitical tensions driving demand for offices. ByteDance, one of these firms, is planning to make Singapore its regional hub as it expands into Asia, and has also make an application for a license to operate a digital bank in Singapore. Tencent has also chosen Singapore as its hub with plans to open a new office in the city-state. Other bright spots include the upcoming redevelopments of AXA Tower and Fuji Xerox Tower in 2021. New condo launch effect rental yield.
Office leasing activity has remained sluggish, however, there are some vacated spaces been taken up by opportunistic occupiers that are seizing the opportunity from the current challenging COVID19 pandemic crisis to lease prime spaces at more attractive rates. QBE Insurance is relocating to Guoco Tower, taking up 31,000 sq ft of space vacated by Grab, which is moving to one-north. Meanwhile, Amazon is leasing 90,000 sq ft across three levels at Asia Square Tower 1 that were previously occupied by Citi. New condo supply vs demand
Despite the positive moves, the office rental market still faces significant challenges with the prevalence of staff working from home being expected to remain widespread in the short to medium term with this uncertain COVID19 pandemic lingering without any near term resolution until the vaccine is made available.
It expects office rentals to fall by 10% in the full-year 2020, with a further decline in 2021. New condominium rental may not be comparable or running in tandem in the current market situation.