Grade A office rents in the Central Business District (CBD) have risen for the eighth straight quarter to hit a 10-year high.

They came in at $9.93 per square foot per month (psf pm) for the three months to June 30, up 12.6 per cent from the same period last year, according to Colliers International.

Rents in the Beach Road or Bugis micro-market set the pace, surging 18 per cent due largely to tight vacancies in office buildings in the area. Average gross effective rents were $9.18 psf pm.

That was followed by rents in the City Hall zone, which grew 13.6 per cent year on year with an average gross effective rent of $10.14 psf pm.

CBD Grade A rents expanded 5.4 per cent in the first half of the year.

Office rents are projected to grow by 5 per cent next year and continue to moderate from the 15 per cent year-on-year growth seen last year.

Ms Tricia Song, Colliers’ head of research for Singapore, said tighter vacancies, along with healthy take-up by technology and flexible workspace firms, spurred growth in the second quarter.

“While we think the rent growth momentum remains strong, the pace of increase has probably peaked as tenants become more resistant to rent hikes,” Ms Song said.

18%

Rise in rents in the Beach Road or Bugis area, largely due to tight vacancies in office buildings in the area. Average gross effective rents were $9.18 psf pm.

CBD Grade A rents are projected to rise this year and next, before dipping moderately in 2021 in view of new supply and potentially softer economic outlook, she added.

Quarter-on-quarter transactions for the second quarter jumped 176 per cent to $2.63 billion.

Two key deals were the sale of Chevron House by Oxley Holdings to United States-based real estate fund AEW, valued at $1.03 billion; and Frasers Property’s divestment of a 50 per cent stake in Frasers Tower to South Korea’s National Pension Service, valued at $982.5 million, Colliers added.

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