Singapore office rents set for surge in late 2014

Singapore's office rents are expected to surge at the end of 2014 after extending a "modest" rebound that started in the second quarter, according to the biggest office trust in Asia outside Japan.

The recovery will be led by companies seeking to set up regional headquarters in Singapore as they face the lowest supply in office space in two decades, Lynette Leong, chief executive officer of CapitaCommercial Trust, said in an interview with Bloomberg Television in Singapore.

Office rents in the business district rose in the past three months, the first gain since the fourth quarter of 2011, according to brokerage Colliers International. Singapore's economy rose an annualised 15.2 per cent last quarter from the previous three months, the fastest pace in more than two years, as services strengthened and manufacturing rebounded.

"I don't think we'll go back to the peak we experienced before the crisis, not so soon, anyway," said Leong, who predicted a rebound in Singapore's office rents in January. "Given that the supply is going to be very limited in the next three years, it will be quite sharp at the tail end. Towards the end of 2014 will be a very strong year."

Singapore, a country smaller than New York City, is drawing more companies as rents dropped in the past year. The city's office costs slumped 16 per cent in the past year, the most globally, according to a CBRE Group survey last month, making it cheaper than Asian locations including Hong Kong, Shanghai, Tokyo and Mumbai.

Leong estimates that Singapore's annual supply of new office space will be lower than one million square feet in the next three years, down from the average 1.3 million over the past 20 years.