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Singapore Office Rents Are Fifth Fastest - Growing Globally

Oct 9, 2007
In a survey of office occupation costs in 176 cities worldwide, Singapore was ranked number 5 on the top 50 markets with the fastest growing rents as at May 2007, from a year ago. The cities were ranked by a 12-month percentage change increases in occupation cost in sq. ft. per annum.

Over this period of time, rents in Singapore rose 53.6 per cent to the price of US$67.97 per sq. ft. per annum (S$8.60 per sq. ft. per month). 90 per cent of the office markets monitored showed positive growth in the 12 months to the first quarter 2007.

Ten other Asian markets were among the top 50 markets with the fastest growing rents, including three in the top 10: New Delhi ranked number 2, with year- over- year rent growth of 79 per cent; and Mumbai was number 6, having experienced 45 per cent rent growth over the last 12 months.

The appreciation in office rents and pricing is a consequence of a fast expanding economy and is consistent with the increases that have been observed in other regional centres. Office occupation cost is a relatively small component of the overall cost of operating out of Singapore.

Financial institutions and major MNCs appear more focused on issues such as access to skilled labour, quality infrastructure and the Singapore government's positive approach to business than excessive concerns over office rents. This said, the tightness of availability of space is certainly a worry and is placing constraints on business expansion.

In North America, the fastest growing rents were recorded in Edmonton, Canada, which ranked number 4 overall, with 60 per cent rent growth. Downtown New York ranked tenth, as rents increased 43 per cent.

In the list of the 50 most expensive office markets, London's West End, the City of London and Tokyo's Inner and Outer Central Five Wards are the top four most expensive office markets in the world, respectively. New Delhi's Connaught Place (CBD), India, was the only newcomer to the top ten most expensive markets, with an occupation cost of US$116.19.

Asia Pacific - Singapore moved up 13 places to take the 24th position. It was number 37 six months ago in November 2006, and number 43 a year ago in May 2006.

Mumbai's Nariman Point rose two spots to fifth in the Top 10 most expensive markets, climbing to US$138.41 over the last 12 months. Occupation costs in Tokyo's Inner Central Five Wards are US$162.09, while Outer Central Five Wards costs are US$143.52. In the Pacific Region, Sydney was the only market to make it into the top 50 most expensive, coming in at 44th.

Europe - At US$241.22, London's West End once again led the Top 50 most expensive office markets. Occupation costs in that submarket are 46 per cent higher than the next most expensive submarket, the City of London (financial district), where occupation costs rose to US$165.72.

Also notable in the region was the Eastern European city of Sofia, where rents in local currency jumped 63 per cent in the last year, making the Bulgarian capital the third fastest growing rental market in the overall global rankings.

Americas - Three North American cities are represented in the Top 50 most expensive office markets: Midtown Manhattan (rising two places to 21st); Calgary (33rd); and Toronto (37th). Caracas rose to US$50.17 and jumped up to 41st from 67th, while Sao Paulo (42nd) increased to US$49.58.
About the Author
Wantanee Khamkongkaew is an independent author evaluating and commenting on leading International Property Consultants in Asia and Greater China , especially CB Richard Ellis.
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