Singapore – Market Report | Q1 2018

April 27, 2018 | Commercial Real Estate

Singapore’s economy grew by 3.6% in 2017, accelerating from the 2.4% recorded in 2016. Apart from the construction sector, all sectors grew in 2017 with the manufacturing, and finance and insurance sectors, the key contributors to GDP growth.

Going into 2018, the momentum that supported the dynamic growth in externally-oriented sectors such as manufacturing and exports is expected to moderate.

Growth is expected to steady in 2018. The continued focus on digitisation and transformation of Singapore’s key industries will help pave the way for more sustainable growth in the longer term.

1. Market Overview

Office:

– We expect the office leasing market to pick up speed amidst strengthening economic conditions.
– Rental growth should accelerate in 2018 (+10-12%) and taper down in 2019 (+3-5%).
– Vacancy rates are projected to step down gradually, amidst expansionary activity led by the services sectors; particularly financial and professional sectors.

Industrial:

– We expect stronger leasing demand, in tandem with the growth in manufacturing and export volumes.
– In 2017, a record new supply of 20.9 million sq.ft. (1.9 million sqm) was completed. Furthermore, we expect 17.5 million sq.ft. (1.6 million sqm) of current stock to come onstream.
– Rents are expected to stabilize in 2018 with some growth in high specifications and business park spaces.

Retail:

– Prime floor retail rents in the Orchard Road shopping belt started to stabilize, rising 1% in 2017, supported by strengthening tourist arrivals and shopping receipts.
– However, the overall retail market recovery will be gradual given the significant structural challenges upending the retail sector.
– Orchard Road prime floor rents should inch up marginally (+1-2%) over 2018, while the Regional Centres’ prime floor rents are likely to fall by a further 1-1.5% in 2018.

2. Co-Working spaces on the rise

The coworking market emerged as one of the main sources of new office demand in 2017, with total market size growing approximately 53.9%. This was driven by multiple new coworking providers setting up their first location in Singapore.

As an example, giant coworking provider WeWork (USA) is leasing 40,000 sq.ft. (3,700 sqm) within the brand-new mix retail/office development Funan on North Bridge Road.

The total footprint of flexible workspaces is also projected to grow 25% in 2018, from the current 2.1 million sq.ft. (195,100 sqm) island-wide.

3. New Developments

Selected new developments for 2018:
  • Frasers Tower – Cecil Street
    • Completion date: June 2018
    • Total size: 690,000 sq.ft. (64,000 sqm)
    • Average floor size: 19-21,000 sq.ft. (1,765 sqm – 1950 sqm)
    • Building height: 38-storeys
  • Paya Lebar Quarter – Paya Lebar
    • Completion date: October 2018
    • Total size: 883,470 sq.ft. (77,430 sqm)
    • Average floor size: 23-32,400 sq.ft. (2,130 sqm – 3,010 sqm)
    • Building height: 12 storeys
  • 18 Robinson Road – Robinson Road
    • Completion date: September 2018
    • Total size: 195,000 sq.ft. (18,110 sqm)
    • Average floor size: 8,850 sq.ft. (820 sqm)
    • Building height: 28 storeys
Selected new developments for 2020/ 2021:
  • Park Mall – Penang Road
    • Completion date: January 2020
    • Total size: 200,000 sq.ft. (18,580 sqm)
    • Average floor size: 11,000 sq.ft. (1020 sqm)
    • Building height: 15 storeys
  • Golden Shoe Car Park – Market Street
    • Completion date: April 2021
    • Total size: 635,00 sq.ft.
    • Average floor size: 30,000 sq.ft.
    • Building height: 51 storeys

 

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The Author

Romain is a highly skilled property specialist, who brings a wealth of experience across different markets across the globe. Previously working as for CBRE (France and Australia) and GUNNING Real Estate (Australia), Romain recently joined the Tenant CS (Singapore) team as an Associate Account Director.

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