Office space prices break all records.

According to the business times, record price of S$2850 psf of net lettable area
has been achieved for one floor of Central in the Clarke Quay area. The price
works out to a yield of 3.2% - 3.6% based on the Corporate locations’s rental
guide of S$7.5psf pm – S$8.5psf pm. Although, it is an expensive price given
that historic transactions have been at a yield of 5%, yet given the positive
outlook of the office sector the yields should catch up to 5%.
For another location in the prime Raffles Place office belt, sources have told
Business that 1 Finlayson Green was sold by Hong Leong group for around
$231 million (around $2,650 psf) to Develica, a UK based property fund
group. The price works out to a yield of 3.5% for the freehold office building
based on net lettable area of about 86,500 square feet. The group expects the
yield to exceed 5% soon as the leases get renewed this year and next year.
The historical high price observed for office psf was S$2200 set in early 1996.
The outlook for the office segment remains very positive due to its favourable
demand-supply dynamics and attractive pricing in comparison to other asian
cities such as Hong Kong, Tokyo and Mumbai. According to JLL, average rents
for prime Grade A office space rose 22.9% qoq to SGD 11.80 psf pm in 1Q07
breaking the all-time peak set in 3Q90 (SGD 11.15 psf pm) and the last peak in
3Q96 (SGD 10.40 psf pm).