It is Expected that They will Continue to Head North in 2H 2013

International property consultant, Colliers International’s latest quarterly research report on the office property sector revealed that rents of Premium Grade1 office space increased for the first time in seven quarters, while office rents in other micro-markets stabilised in 2Q 2013.  


As of June 2013, the average monthly gross rents of both Premium Grade and Grade A2 office space in the CBD stood at S$8.42 per sq ft, which is relatively unchanged from the S$8.41 per sq ft recorded for the preceding quarter.  

Specifically, the average monthly gross rents of Premium Grade office space in the Raffles Place/New Downtown micro-market rebounded 2 per cent on a quarter-on-quarter (QoQ) basis in 2Q 2013 to reach S$9.60 per sq ft.  This is the first time office rents in this micro-market have risen since the market downturn in 4Q 2011.  

Mr Marcus Loo (劳耀萳), Executive Director of Office Services at Colliers International, says, “Office buildings located in the New Downtown area has continued to draw interest from tenants – as the locality progressively develops to become the new financial centre of Singapore, with both the road and public transport infrastructure taking shape. 

Additionally, we continued to witness flight to quality during the quarter, as tenants took the opportunity to take up better quality office space.  This demand has, therefore, lent support to landlords who were then able to either maintain or increase their asking rents – resulting in the stabilisation of rental levels islandwide, with recovery being more encouraging in Premium Grade developments.”  

Occupancy Rate 

Given tenants’ continued flight to quality, the average occupancy rate of Premium Grade office space in the Raffles Place/New Downtown micro-market increased for the fifth consecutive quarter to 93.5 per cent in 2Q 2013 – a marked improvement from the 90.2 per cent in 1Q 2013.

Demand for new space at Premium Grade office buildings in the Raffles Place/New Downtown micro-market in 2Q 2013 were mainly from the financial and business services industries, which required single-floor space or less. 

For instance, National Australia Bank and Swiss Reinsurance Company have committed to take up space at Asia Square Tower 2, while IHS Global has shifted its operations at various locations to consolidate at Asia Square Tower 1. 

Meanwhile, occupancy rates in the other micro-markets have also increased, with the exception of Beach Road and City Fringe micro-markets.  Most of the tenants have renewed their office leases, while those who have committed to office space in the new developments are not immediately releasing their office premises back into the market – providing landlords with lead time to find replacements. 

Capital Values

On the sales market front, strata-titled office units continued to draw interest from investors in 2Q 2013. 

It was observed that there were more sellers leveraging the buoyant demand by putting up their office properties for sale.  Examples of such properties that were put up for sale included units in Samsung Hub, Springleaf Tower, Sunshine Plaza and Suntec Tower.   

Notable deals that were concluded in 2Q 2013 included an 883-sq-ft unit at Samsung hub which was sold for S$3,500 per sq ft, and a 10,333-sq-ft unit at Springleaf Tower which was sold for S$2,200 per sq ft.  The prices were the highest achieved for the respective developments.  

However, the average capital value of Premium Grade and Grade A office space in the Raffles Place/New Downtown micro-market continued to stay flat at S$2,640 per sq ft and S$2,390 per sq ft, respectively, due to the absence of any vivid signs of a global economic recovery.


Going forward, there are still positive signs to indicate that office rents could improve in 2H 2013 – underpinned by the continuous initiatives by the Government to grow the city’s economic base and to develop the Republic as a Global-Asia hub.  

Demand for office space is, therefore, expected to continue to be supported by financial institutions, legal and private equity firms, as well as businesses in other professional and business services industries.  

Ms Chia Siew Chuin (谢岫君), Director of Research & Advisory at Colliers International, says, “On the back of improving market sentiments, and given that more office tenants are on the lookout for modern and efficient floor layouts, rents for Premium Grade office space in the Raffles Place/New Downtown micro-market is expected to head north in 2H 2013 by up to 5 per cent. 

Meanwhile, office rents in the other micro-markets are expected to stay relatively flat, with some marginal upsides until the end of 2013.” 

For the sales market, office properties are expected to continue to appeal to end users and investors with a long investment horizon – underpinned by the low interest rate and high liquidity environment.  

Ms Chia concludes, “Strengthened by the bottoming-out of office rents, overall office capital values have the potential to climb by another 2-3 per cent in the next 6 months.” 


  1. The Premium Grade basket covers new office buildings with the highest quality specifications in the Raffles Place/New Downtown area. 
  2. The Grade A basket comprises good quality buildings with well sought-after specifications in strategic locations that are well served by amenities and transport nodes. 
  3. The Grade B basket comprises average quality buildings in locations that are reasonably served by some amenities and transport nodes.