Singapore is set to become the fastest growing economy in Asia this year as all the markets have responded positively to economic growth.
Jones Lang LaSalle (JLL) has expressed a positive outlook for the office market due to the buoyant economic data, while residential activity remains healthy with capital and rent values increasing accordingly. Sentiment for the retail market has also improved, with healthy occupancy rates and stabilization of rental values in many malls.
The Marina Bay area, which comprises retail, residential and commercial development, has also proved to be an attractive option for occupiers and investors.
Though commercial and residential supply can be sustained until 2012 with the completion of Asia Square, Marina Bay Financial Centre (MBFC) and other key developments, a limited availability of high-end commercial and residential projects will likely emerge after 2013 aside from the South Beach Development.
The high-end South Beach development, where construction will start early next year, has received considerable interest from investors considering that the mixed-use project will comprise a retail piazza, two hotels, offices and residential apartments.
“The South Beach Development plans to capitalize on the ‘live-work-play’ concept within the city, offering residential occupiers and office tenants highly convenient access to shopping clusters, transport networks and plentiful food and beverage options,” said Chris Fossick, JLL’s managing director for Singapore and South East Asia.
Meanwhile, the core CBD vacancy rate declined from 9 percent in Q1 to 7 percent in Q2, attributed to good take up rates particularly in recently completed buildings and investment grade assets. An increase was also seen in pre-commitment leasing activity, with the Ocean Financial Centre reporting pre-commitment levels of above 60 percent and the MBFC announcing near full-pre-commitment levels before its completion.
The Marina area, on the other hand, saw a decline in retail vacancy rates to 3.4 percent in Q2 from 3.5 percent in Q1. Competition for malls in the area is likely to heighten as new supply comes on stream.
“With positive economic fundamentals backed by a strong regional economic outlook, optimism in the Singapore market has picked up and rents in all sectors are expected to stabilize,” said Mr. Fossick.