http://www.straitstimes.com/archive/...ueeze-20150124

Rents in CBD set to rise amid supply squeeze

Prime office rents up 15% in 2014, trend to continue: CCT Management

Published on Jan 24, 2015 1:27 AM


SINGAPORE'S prime office rents are set to extend gains this year as the number of new properties coming onto the market is limited, according to CapitaCommercial Trust (CCT) Management.

"The market is looking good as the supply is very tight this year, so the rise in rentals will continue," Ms Lynette Leong, chief executive officer of CCT Management, said in an interview.

The company runs the biggest office real estate investment trust (Reit) in Asia outside Japan.

Singapore's prime office rents posted their biggest increase in at least four years in 2014.

The office rent index rose 9.8 per cent last year, its largest gain since 2010, when it was up by 12 per cent, according to data from the Urban Redevelopment Authority.

Ms Leong said prime office rents rose 15 per cent last year, and will rise again this year, though she declined to give a specific prediction.

Companies involved in social media, technology and commodities are taking up space in Singapore's Central Business District (CBD), offsetting the cutbacks by investment banks, she said.

CCT, the listed Reit, reported a net property income of $50.6 million for the quarter ending on Dec 31, rising by 3 per cent from a year earlier.

The trust's monthly average office rents rose 5.9 per cent to $8.61 per square foot last year.

Ms Leong said the Reit-management company has been signing longer leases on commercial properties in readiness for any softening in rents, when a large supply of office space comes onto the market from 2016.

For example, leases on the trust's new CapitaGreen tower in the CBD are for four years, rather than the usual three, she said.

About 1.15 million sq ft of new office space will come on stream this year, rising to 1.6 million sq ft next year and 4.7 million sq ft in 2017, according to real estate broker Knight Frank.

Some 69 per cent of CapitaGreen tower is leased at rentals ranging from $9.80 per square foot to $16 per square foot, Ms Leong said.

CCT is partly owned by CapitaLand, South-east Asia's biggest developer.

It is the biggest office Reit in Asia, by market value, after Japan's Nippon Building Fund and Japan Real Estate Investment, according to data compiled by Bloomberg.

The trust, whose units rose 21 per cent last year, yesterday rose two cents to $1.925.

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