“Unfortunately, the share price outperformance was short-lived, weighed down by macroeconomic concerns and the Fed pushing on its aggressive rate hikes, raising 75 basis points (bps) in its third and fourth consecutive hikes in September and November. Thus, it resulted in a divergence of share price underperformance on strong underlying outperformance
in the office sector, especially after 3QFY2022,” say Tan and Tan.
DBS Group Research analysts Rachel Tan and Derek Tan say that economic headwinds could moderate office rent growth momentum going into 2023, despite its “good run” in 2022.
The Singapore office sector saw its Grade A core central business district (CBD) rent surpassing its pre-Covid high of 2019 with a 7.2% increase in 9M2022. Average rents of $11.60 per square foot per month (psf/month) also surpassed pre-Covid highs in 2019. Office and commercial S-REITs share prices hit their peak in August after re-rating by 15% since
the beginning of the year, outperforming other asset classes as of September — before the sentiment turned.
