Flexible workspace and technology giants still driving demand in the office leasing market, and additional relief measures for property developers.
The expected demand for more flexible workspaces and a ramp-up of operations by tech giants could help to cushion the softness in office leasing demand in Singapore.
This comes amid the year-to-date decline of 3.4% in Central Business District (CBD) Grade A office rents and further weakness expected in Q4 2020, said a report by real-estate services and investment management firm Colliers International. In particular, CBD Grade A gross effective rents continued to moderate further by 2.3% quarter-on-quarter to S$9.77 per square foot per month (psf pm) in Q3 2020.
Rick Thomas, Executive Director and Head, Occupier Services:
While some of the tech giants have a small presence in Singapore now, we can expect them to bloom in the years to come and improve the tech sector representation of the overall occupiers in Singapore.
With the recent government relaxations of work-from-home restrictions, occupiers who have already started strategising and rationalising their real estate portfolio will now act. Landlords are more willing to negotiate, while occupiers are in search of greater value.
Related content: Tech Occupiers Remain Bright Spot | Office Q3 2020 report
Eligible property developers hit by disruptions to construction timelines due to COVID-19 can take up a set of additional temporary relief measures with immediate effect, the government said on Thursday night.
Market watchers The Business Times spoke to said that these measures will cushion the impact of the slow resumption of work and the disruptive nature of the pandemic. The additional relief measures are:
- A further six-month extension of the project completion period (PCP) for residential, commercial and industrial development projects;
- A further six-month extension for the completion of residential development projects in relation to the remission of the Additional Buyer's Stamp Duty (ABSD) for housing developers;
- An extension of the PCP by up to six months for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers.
Steven Tan, Senior Director, Capital Markets and Investment Services:
The relief measures are fair and reasonable, taking into account the disruptions caused to the construction sector by the circuit breaker and quarantine periods.
The 6-month extensions will give developers a breather and they need not be under tremendous pressure to dispose their units in order to avoid penalties from QC and ABSD deadlines. Buyers may consider purchasing the units before the deadline to get good bargain.
The pressure to sell would have eased, once developers have paid off any QC and/or ABSD penalties and will in turn pass on the costs to consumers.
Tricia Song, Director and Head of Research:
Showflats have reopened after slightly less than three months of shutdown, and the pre-sales since June have almost caught up with 2019’s pace of pre-sales.
The delays have been mainly in the commencement and construction of projects. Hence, we think the extension of relief measures is equitable, targeted at relieving the pressures of meeting deadlines specific to project completion dates.
While the clampdown of re-issuance of options to purchase (OTPs) could cool the market by encouraging marginal buyers to exercise more financial discipline, we believe there is genuine demand. Good projects priced sensitively should still be able to sell within the timeline.
Not extending the deadline to sell should encourage developers to continue to price their projects attractively, instead of holding back due to reduced urgency.