
Chart of the Day: Office rentals reached inflection point in 4Q11
Not time to rejoice yet though as there are no sufficient signs to indicate that the sector is bottoming out.
According to OCBC Investment Research, it is too early to call a bottom for the domestic office sector given macroeconomic uncertainties and an ample office pipeline of 4.2m sqft NLA in FY12-13.
“Over 2H11, we saw office rents peak as Grade A rents declined 0.5% QoQ in 4Q11 while Grade B rents fell by 0.4%,” it said.
OCBC said that the optimism on office rentals are driving share prices of listed property developers like Keppel Land but cautioned of persistent downside risks should headline rentals and capital values continue to decline.