OFFICE RENTAL INDEX (1984 - 1991)

Abstract

Many index numbers have been developed as indicators of economic and business conditions. They are commonly used for comparing changes over time. In Singapore, the URA's Property Price Index is the only locally published index which measures the movements in property prices. \ The URA had since first quarter of 1991 included for the first time a quarterly rental index for office and retail space. This study seeks to construct a rental index for different classes of offices located in the CBD area from 198b to 1991 with 1985 as the base year. The approach adopted however differs from that of URA's which relied on the conventional method of using the quantum of rental values as weights. The alternative method of using a verage rental le vels was tested by com paring the results obtained with that of URA's. The findings showed marginal differences between the two. In addition, the stability of the weights employed over the study period has resulted in only a slight disparity between the Laspeyres and Paasche's Index. As such, there is no preference as to which of the two formulae to use. The movement of rental levels of the different classes of office buildings is generally found to be quite similar with rental scaling down continuously from 198b before picking up steadily in the later part of 1987 and surpassing the levels achieved in 1985 during the early quarters of 1989. The similarity in the trend of the sub-indices of the different categories of offices is also evident in the high correlation coefficient obtained. There is however no conclusive evidence to show which category of office building out-performed the others.