Singapore office rents declined as much as 8.8 percent in some parts of the city-state in the first quarter, hurt by the weaker global economic outlook that led firms to hold back their expansion, real estate consultants Colliers International said.
The fall signals the downturn in the office rental market has worsened and Colliers expects more pressure on rents.
Office values held firm in the first quarter, however, as record low interest rates and measures to cool the residential market attracted buyers to the office sector.
Singapore, a barometer for its neighbours with trade flows that are three times the size of its economy, is pitching itself as a gateway to fast-growing Asia with its low taxes, financial infrastructure, clear-cut regulations and location.
Average rents for Grade A office space in the Raffles Place/New Downtown central business district now average S$9.76 ($7.73) per square foot per month, down 5.3 percent from the fourth quarter, Colliers said in a report on Wednesday.
Grade A rents in the core central business district declined by 4.3 percent in the fourth quarter of 2011.
Colliers said the last time when the monthly gross rents for Grade A office space in this micro-market were below S$10 per square feet was in the first quarter of 2011 - at S$9.72 per square feet. Rents then were still on an uptrend.
The Beach Road area, east of the central business district, suffered the largest drop of 8.8 percent, with rents now averaging S$5.21 per square foot per month, Colliers said.
"Despite the economic uncertainty, there are industries such as those in mining and gas, private banking, equity investment, and information and communications services, which have remained optimistic and maintained their expansionary mode, Chia Siew Chuin, director of research and advisory at Colliers said in a statement.
Singapore's biggest office landlords include CapitaCommerical Trust, Suntec Real Estate Investment Trust and K-REIT. ($1 = 1.2632 Singapore dollars)