The slump in office prices in the Central Area outpaced the decline in rents last year, likely due to the pandemic-linked uncertainties plaguing the office market. While prices and rents for offices have moved in the same direction over the past two decades, rents have typically proven to be more sensitive to market shocks. NUS’s IREUS said that the office price index for the Central Area shrank 10.8 per cent y-o-y in Q4 2020, more than the 9 per cent contraction in the office rental index for the Central Area. IREUS deputy director Lee Nai Jia said: “Given the prices of office buildings are often deemed to be the sum of discounted net rental income, the faster drop in the price index may reflect the greater uncertainty faced by the office market.” For starters, the ongoing pandemic makes it tough for firms to determine their space requirements as they may be struggling to ascertain demand for their goods and services in the future. The shift towards flexible work arrangements may also prompt companies to cut their physical footprint.... Continue Reading