Financial News - 31 MAY 2010: Singapore office property market picking up, says expert

Source

Singapore's office property market is picking up, according to brokerage firm Nomura.

It noted that office rentals in Singapore are bottoming out amid stronger-than-expected demand, prompting tenants to commit sooner than expected.

Nomura said a reduction in occupancy costs and the desire to secure contiguous expansion or better quality space has prompted pre-commitments.

Given such stronger demand - with 79.9 per cent of this year's supply pre-committed - Nomura said vacancy is likely to be lower than previously forecast.

It has also raised its rental expectations by between 7.9 per cent and 15.4 per cent for International Grade A (IGA) space, and between 5.4 per cent and 10.4 per cent for Grade A space.

On the back of the revisions, Nomura is bullish about the sector and has raised its price targets for office landlords listed here.

Its top picks are Keppel Land, Singapore Land, CapitaCommercial Trust and K-REIT Asia.

It said it's keeping its "buy" rating on Keppel Land and K-REIT Asia as they are most exposed to the IGA office market.

As for Singapore Land and CapitaCommercial Trust, Nomura said valuations for the two firms remain compelling.