Chart of the Day: Office rents to decelerate this year

Grade A rents may decline around 5%.

The latest quarterly survey of private sector economists by the Monetary Authority of Singapore revealed an upbeat sentiment in terms of GDP growth in Singapore this year.

According to CIMB, the higher confidence gives hope that the office market could be nearer to the bottom.

"We expect Grade A office rent to decline around 5% in 2017 to $8.65 psf pm (4Q16: $9.10), representing a peak-to-trough of almost 30%. Meanwhile, we project office vacancy levels to peak at 13.2% as at end-2017 vs. 11.1% in 4Q16. We expect negative rental reversion for office REITs in 1Q17, although the effect is mitigated by relatively short lease expiry towers," noted CIMB.