– July 2020

MARKET IN MINUTES Offi ce Savills Research

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SINGAPORE Marcus Loo CEO, Singapore +65 6415 3893 [email protected] Ashley Swan Executive Director Commercial +65 6415 3872 [email protected]

Leasing market was very subdued RESEARCH Business activity has been seriously disrupted with the suspension of non-essential Alan Cheong Executive Director services and the closure of most workplace premises during the circuit breaker (CB). Singapore +65 6415 3641 • Offi ce tenants in the reviewed quarter shifted their • With 1H/2020 rents falling just 2.4% compared to 2H/2019, [email protected] attention to the urgency of receiving supporting packages, we have reduced our full year rental decline from -10% to Simon Smith including property tax rebate and rental relief. -7.6% and for 2021, from -5% to -1.3%. On a bright note, Senior Director signifi cant delays in new building completions and offi ce Asia Pacifi c • Both new offi ce building completions and the fi tting out blocks being taken off the market raises the probability +852 2842 4573 of offi ce premises are expected to be delayed signifi cantly, that rents may even increase next year. [email protected] because of the halt in construction works, safe distancing MCI (P) No. 018/10/2019 measures, manpower constraints and supply chain Company Reg No. 198703410D

disruptions. Savills plc “ A supply crunch from Savills is a leading global real estate service provider listed on • As Singapore came out of the CB and physical viewings of the London Stock Exchange. The construction delays and company established in 1855, has property resumed from Phase Two of the reopening on June a rich heritage with unrivalled growth. It is a company that leads 19th, the leasing market did see a fl urry of activity due to buildings being redeveloped rather than follows, and now has over 600 offi ces and associates pent-up demand. throughout the Americas, Europe, could upset overly bearish Asia Pacifi c, Africa and the Middle East. This report is for general • From data compiled by Savills, the net take-up of CBD Grade informative purposes only. It may views.” not be published, reproduced or A offi ces contracted by some 86,000 sq ft in Q2/2020, while quoted in part or in whole, nor may it be used as a basis for any the overall vacancy rate increased for the fi rst time since ALAN CHEONG, SAVILLS RESEARCH contract, prospectus, agreement or other document without prior Q1/2018, up 1.4 percentage points (ppts) to 5.7% as at end-Jun consent. Whilst every eff ort has been made to ensure its accuracy, from three months ago. Savills accepts no liability whatsoever for any direct or consequential loss arising from its • In Q2/2020, average rents of CBD Grade A offi ces continued to use. The content is strictly copyright and reproduction of the slide for the second consecutive quarter, down 1.6% quarter- whole or part of it in any form is prohibited without written on-quarter (QoQ) to S$9.84 per sq ft (psf) per month. permission from Savills Research. savills.com.sg/research 1 Offi ce

MARKET COMMENTARY Robinson 77. At in Tanjong Pagar, GRAPH 1: Net Demand, Net Supply and Vacancy Rate QBE Insurance (Singapore) and Toyota Motor of CBD Grade A Offi ces, 2015 to 1H/2020 According to advance estimates by the Ministry of Trade and Industry (MTI), Singapore’s Asia Pacifi c have leased one fl oor each which Net demand (LHS) Net supply (LHS) Vacancy rate (RHS) economy entered a technical recession with will be vacated by Grab. 3,000 40% gross domestic product (GDP) shrinking For investment sales, the performance in the 35% further in the second quarter by 12.6% on a offi ce property market bucked the trend with 2,500 yearly basis. The deep slump was attributed to three big-ticket transactions recorded in Q2. 30% weak external demand amid a global