Ravi Chandran
The Singapore prime office market is expected to record the highest rental growth among the various market sectors in 2019 as a tight supply pipeline in the next 24 months continues to boost landlords’ rental expectations.
The report said that Singapore prime office rental growth should continue to outperform the rest of the region in 2019 as a limited supply pipeline and healthy demand raises landlords’ expectations.
Table of Contents
M&G Real Estate which released this finding in its Asia Real Estate Market Outlook report said demand for Singapore prime office is likely to remain positive as the city continues to position itself as a business hub for foreign corporates seeking to establish an APAC or South-East Asian head office.
Similarly, Osaka’s prime office market has seen a slow supply response to tightening vacancy, and new developments
in the next two to three years remain limited. The Tokyo prime office market, on the other hand, is expected to see negative effective rental growth due to a significant rise in supply over the next two years.
The report said that Sydney regional retail rents are also likely to dip over the next 12 months due to a more challenging retail environment, in part owing to weaker spending by consumers on the back of a fall in both house prices and savings.
https://www.icompareloan.com/resources/office-space-demand/
M&G Real Estate said that this has led to rising occupancy costs for tenants. Greater Osaka’s logistics market currently has one of the highest vacancy rates within the five developed APAC markets as a result of an influx of supply. Thus Osaka logistics rents are forecasted to continue declining in the first half of 2019 and bottom out as new supply tapers and demand continues to strengthen.
The report said that healthy occupier markets and stable domestic macro fundamentals should continue to attract real estate investment in the region in 2019 despite cyclical, geopolitical and structural challenges.
“Furthermore, most market sector yields are still around 200 basis points above local 10-year government bond yields, providing a sufficient buffer to absorb a rise in interest rates and borrowing costs. Investment momentum is likely to be slower than the previous year, however, as diminishing returns may lengthen the search for investable assets and the underwriting process.”
Pricing for real estate assets may have reached its peak as yield compression across most market sectors plateaus, the report added. It suggested that investors should increasingly focus on income returns and profile in their investment decisions; assets with secure and stable income streams could prove to be more defensive against upcoming macro headwinds.
M&G Real Estate noted that the services sector has seen growth across the five developed APAC economies over the last two years, with the rise of financial and business services, as well as info-communications, media and technology industries.
Competition for talent in APAC economies has ensured the rental growth of Singapore prime office market,
“This has driven demand for office space in the region, particularly prime buildings in the CBD due to competition for talent, as per Australia’s key cities as well as in Singapore. With the services sector expected to continue supporting growth of developed APAC economies, and potentially contributing more towards overall GDP in the medium term, demand for office space is expected to remain healthy overall.”
The report added that demand and supply fundamentals across most office markets in the five developed APAC economies should remain positive in 2019 with vacancy rates below long term averages and future supply relatively moderate. But regional Japanese cities, such as Osaka and Nagoya, are expected to show relatively strong office rental growth in the next 12 months as supply has been slow to respond to growing take-up.
https://www.icompareloan.com/resources/grade-a-office-rents/
Rising rents in the CBD, coupled with low vacancy, are likely to encourage more occupiers to consider taking up space in fringe sub-markets where costs are lower. But external headwinds remain the key threat to the five developed APAC economies, said the report.
“A prolonged US-China trade dispute, should negotiations between both countries wither, would continue to weigh negatively on global trade momentum; a resulting uncertain macro environment could affect corporate investments and magnify the impact of the trade dispute. An anticipated slowdown of the Chinese economy could also potentially hurt tourist arrivals and consumption, as well as service imports, thus placing further downward pressure on the region.”
The report warned that particularly export-oriented cities such as Hong Kong, Singapore and South Korea, therefore, will likely see slower growth in 2019. Such slower growth could be a speed bump in rental growth for the Singapore prime office market.
How to Secure a Commercial Loan Quickly
Are you planning to capitalise on the uptrend of the Singapore prime office market but unsure of funding for investment? Don’t worry because iCompareLoan mortgage brokers can set you up on a path that can get you a commercial loan in a quick and seamless manner.
Alternatively you can read more about the Best Commercial Loans in Singapore before deciding on your purchase. Our brokers have close links with the best lenders in town and can help you compare Singapore commercial loans and settle for a package that best suits your commercial purchase needs.
Whether you are looking for a new commercial loan or refinancing for your commercial properties, our brokers can help you get everything right from calculating mortgage repayment, comparing interest rates, all through to securing the best commercial loans which fits your profile. And the good thing is that all our services are free of charge. So it is all worth it to secure the best commercial loans through us.
For advice on a new commercial loan or Personal Finance advice.
To speak to our Panel of Property agents.
For refinancing advice.
