Dim property outlook for office and retail sectors
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The property market might be displaying resilience amid a global economic slowdown, but experts say both the office and retail segments face weakness ahead.
Office space did better than expected in the three months to September. Vacancy rates fell and more space was leased than was vacated for a fourth straight quarter.
However, office rents are still falling and are set to come under further pressure, a report by property consultancy CBRE said. This is particularly so for older office buildings - such as One George Street, PWC Building and DBS Tower One - as space becomes available when existing tenants move to newer buildings, it added.
Stronger-than-expected occupier demand surprised analysts, but was not enough to halt rents from sliding further in the third quarter. The fall, however, happened at a slower pace.
Grade A office rents fell by 2.5 per cent to $9.80 per sq ft (psf) a month from the figure in the previous three months. They are down 10.9 per cent so far this year, CBRE said. Rental falls are expected to be minimal in the next quarter, with Grade A rents to reach support levels next year.
