Grade A office rents to surge 10% in 2014

But it will stay flat this year.

According to OCBC Investment Research, it believes that this dynamic of limited supply, firm net absorption and improving rentals will continue over 2HFY13-FY14, particularly in the Core CBD micro-market where most of OUE’s office exposure falls into. 

OCBC predicts Grade A rentals will increase by 10% in 2014.

Here's more:

From end 4Q12 to end 2Q13, the vacancy rate in the Core CBD micromarket fell from 7.8% to 5.0% as net absorption came in at a firm 338k sq ft.

We forecast for Grade A rents to stay mostly flat YoY in FY13. In FY14, however, Grade A rentals are expected to increase 10% as an net absorption rate of 2.0m sq ft would drive vacancy rates as low as 1.6% with limited office supply coming online (only CapitaGreen with 700k sq ft of NLA).