Office prices peaking?

Average occupancy cost of prime office space in Raffles Place grew only 1.1% quarter-on-quarter to $19 per square foot per month (psf pm) in the second quarter of 2008.

Apart from Raffles Place, Shenton Way/ Robinson Road/Cecil Street and decentralised areas, growth in occupancy costs in other areas like Marina Centre and Orchard Road was flat in 2Q 2008.

This is by far the most convincing sign that office occupancy costs in Singapore may have peaked.

As more new supply comes on stream, office occupancy is likely to ease, thus thwarting growth in occupancy costs in the CBD for the rest of 2008.

Besides, the cautious business outlook, the current market trend of companies gravitating towards cheaper premises like decentralised office buildings, industrial properties, business parks and disused state properties is also putting a downward pressure on office occupancies.

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