By Report, PropertyGuru

Unit prices of Singapore's office real estate investment trusts (Reits) continued to fall, on the back of growing concerns that rental revisions will likely have a negative impact in the next few quarters.

According to a report by The Business Times, CapitaCommercial Trust (CCT) lost 4.5 percent to end at S$1.17 yesterday, while Suntec Reit slipped three percent to close at S$1.295 and K-Reit Asia lost 1.7 percent to end at S$1.135.

Some analysts attributed the dull unit price performance of office landlords to waning rental growth.

"We expect negative rental reversions to continue (in the office sector), mainly because of the high rents signed three years ago," said Alvin Tan, an analyst from Moody's Investors Service.

However, he said that Moody's does not expect Singapore Reits' credit rating to be hit, as they are well equipped and well capitalised to manage any downward pressure on rents over the next few quarters.

According to Savills' Q2 2011 report, leasing activity for Grade A office space softened despite weaker economic growth, global uncertainties and increasing secondary stock that resulted in a 2.7 percent rental growth after three quarters of strong growth.

"Average Grade A rents have almost reached their peak and the growth is expected to enter negative territory by the end of this year," it said.

23 Aug 2011