The office property market in Singapore could see an improvement in the second quarter of next year on the back of an economic recovery, according to consultants. They said the anticipated improved economy would attract more corporations to open offices in the country and subsequently would increase demand. Hit hard by the outbreak of severe acute respiratory syndrome (Sars), Singapore's economy fell 11.4 per cent at a seasonally adjusted year on year rate in the second quarter from the first quarter. Nicholas Mak, associate director of research and consultancy at Chesterton International in Singapore, said the country's economy was expected to have 1 per cent growth this year and 'a nice little bounce' next year. An economic recovery would possibly revive the office market, which has been declining since the 1997 regional financial crisis. Mr Mak said the office sector started to slide at the onset of the Asian financial crisis and held over in 1999 to 2000. 'In 2001, it started to decline again,' said Mr Mak. According to Chesterton International, leasing activities in the office sector fell by about 30 per cent in the second quarter from the previous one due to uncertainties brought about by the US-Iraq war and the Sars outbreak. Rents on average fell 2.4 per cent quarter on quarter to S$4 (HK$17.76) to S$5 per square foot. The decline was slower than the 3.5 per cent dip in this year's first quarter. However, the net amount of vacant space increased from 11.04 million square feet to 11.9 million sqft, bringing the average vacancy rate to 17 per cent. In the sales market, average prices in the second quarter fell 14.7 per cent year on year. Mr Mak said demand for office space was weak in the wake of the war in Iraq, the Sars outbreak and the slow economy. He predicted a further decline in capital values and rents, while office vacancy rates would rise. 'Rents in the whole of this year will fall 10 to 15 per cent [from last year], while prices will see a similar decline,' he said. While demand for office space was weak, an abundance of new supply was expected to come on to the market in the next few years, according to Mr Mak. Jones Lang LaSalle said shrinking demand and high vacancy levels would suppress office rents during the second half of this year.