Office occupancy remains steady: Savills

Amid a relatively slow absorption level across the office sector, occupancy remains steady in many buildings, according to Savills Research's Office Briefing report for Q1 2012.

Alan Cheong, Director at Savills Singapore, said "demand from investment banking institutions have tailed off."

"On the other hand, MNCs in the oil & gas, commodities and natural resources sector together with banks specializing in wealth management have continued expanding."

Enquires from users of small- and medium-sized office space were prominent during the period. Additionally, Grade A office occupancy in the CBD improved slightly, with vacancy rates falling to 6.5 percent in Q1 2012, from 6.8 percent in Q4 2011.

Meanwhile, Grade A monthly rents fell 1.7 percent in the first quarter to S$8.58 psf. Investment sales also stagnated, as average capital values for CBD Grade A offices dropped 4.1 percent to S$2,445 psf.

"Island-wide, the future supply between 2012 and 2015 totals about 6.90 million sq ft, of which about 59 percent or 4.04 million sq ft will be located in the CBD, " it added.

Moving forward, Savills forecasts a nine to 11 percent rise in vacancy rates by end-2012, backed by new supply and possible shadow space.

"Increasing volumes of vacant space will inevitably put pressure on Grade A rents, which are expected to continue trending downwards in the next few quarters."

Furthermore, 98.3 percent of the sellers in the industrial property sector made a profit in 2011 and Q1 2012, while the remaining 1.5 and 0.2 percent suffered losses and broke even respectively.

The report added that average profit stood at S$207,000, while average loss reached S$74,000.

Cheong predicted that in the face of protracted uncertainties, "prices could come off by some five percent this year while rents are expected to hold firm due to the changing profile of tenants towards those in higher value-added trades or quasi-showroom users."

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