Office rental cycle has peaked; retail rents may have bottomed out

Singapore

IT SEEMS a tale of two cities between Singapore's office and rental markets, going by the latest data from the Urban Redevelopment Authority (URA).

The figures suggest that the office rental cycle has peaked against the backdrop of clouded business sentiments and tenant resistance to further rental hikes. On the other hand, retail rents, which have been in a multi-year decline phase, may finally have bottomed.

The URA's office rental index for the central region slipped 3.2 per cent quarter on quarter in the fourth quarter of 2019, the biggest q-o-q decline since first quarter 2017.

The full-year 2019 drop of 3.1 per cent is in stark contrast with the 7.4 per cent gain in 2018.

URA's retail rental index for the central region climbed 2.3 per cent quarter on quarter for Q4 last year - the same rate of increase in Q3 2019. This was the second consecutive q-o-q rise in the index, which posted a full-year gain of 2.9 per cent. It had dipped one per cent …