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Singapore third-quarter office rents see biggest fall in 11 years

FILE PHOTO: Essential workers wearing face masks walk past the skyline of the central business district outside a regional screening center amid the coronavirus disease (COVID-19) outbreak in Singapore June 9, 2020. REUTERS/Edgar Su/File photo

SINGAPORE (Reuters) - Office rents in Singapore saw their steepest decline in 11 years in the third quarter, official data showed on Friday, as the COVID-19 pandemic hit leasing demand for commercial real estate in the regional business hub.

Rents for office space fell 4.5% on a quarterly basis in July-September, data from the Urban Redevelopment Authority showed. That was the biggest quarterly decline since the April-June period in 2009, when rents fell by 7.7%.

The city-state, which is facing its deepest recession ever due to the pandemic, had implemented lockdown measures earlier this year and has been encouraging office workers to work from home, although some rules are easing as coronavirus cases fall.

“The office market could continue to face significant headwinds going into the next few quarters,” said Christine Li at real estate consultant Cushman & Wakefield.

However, the city-state’s office leasing market will benefit from the expansion plans of companies such as TikTok owner ByteDance and gaming giant Tencent Holdings Ltd, she added.

Despite the broader economic downturn, the city-state’s private home market has been holding up and prices rose 0.8% in the third quarter, unchanged from advance data, and higher than a 0.3% increase in the second quarter.

Data last week showed sales of private homes in Singapore rose to their highest in over two years in September, with analysts citing low interest rates and signs the city-state’s economy is recovering from a coronavirus slump.

Reporting by Aradhana Aravindan in Singapore; Editing by Ana Nicolaci da Costa