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Office rents expected to increase up to 15% in 2014

Office rents in Singapore are expected to increase by up to 15 percent this year on the back of a dearth of new developments and increased demand, according to CapitaCommercial Trust (CCT) Management Ltd's chief executive officer, Lynette Leong.

Leong noted that the recovery is being driven by global companies such as Bordier & Cie, a Swiss private bank's local subsidiary, and Cargill Inc., which is the biggest agricultural firm in the US.

"I see an acceleration in rents coming in the second half, as there is no new supply next year and tenants will feel the crunch when they realize there is no new supply," said Leong, whose company manages the largest office trust in Asia outside of Japan.

Ranked by Cushman & Wakefield as the most affordable of the top five major financial centres, Singapore's office rents are due for a rebound as strong demand amid high occupancy rates reinforce the bargaining power of landlords.

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Meanwhile, Chua Yang Liang, head of research for Singapore and Southeast Asia for Jones Lang LaSalle, said there is a short-term mismatch between the demand and supply of office space which could result in a rental increase.

Notably, this year's office supply stands at around 1.2 million sq ft. Although no new developments are expected next year, an additional 296,000 sq m of space will enter the market in 2016.

"The recovery is on track. The demand is coming from all segments of the economy, unlike in the past which was more from the financial institutions," said Chua.

Christopher Chitty, Senior Content Producer at PropertyGuru edited this story. To contact him about this or other stories, email christopher@propertyguru.com.sg

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