A 20 to 25 per cent fall in Grade A office rents in Singapore this year will emerge as a reason for widening the gap between rents here and in Hong Kong and give Singapore a competitive advantage of the firms looking to expand in Asia, property firm Savills said yesterday.

Rents are speculated to fall to $5 per square foot (psf) per month in 2011, accounting to a massive new supply comes on-stream, the firm's research shows. Grade A office rents stood at $8.80 psf per month at the end of 2009, reported Savills.

In addition, prices for prime office space in Singapore are expected to rise by up to 5 per cent this year. In Hong Kong, prices are expected to increase by a modest 5 per cent to 10 per cent after a 50 per cent increase last year.

Despite of the fact that major part of Hong Kong's growth is coming from mainland Chinese investors, it is expected to slow as the Chinese government gradually remove its stimulus measures.

In contrast, Hong Kong and Singapore witnesses a similar situation. Prices for luxury residential property are speculated to increase by 10 to 15 per cent in both cities.

Prices could perhaps reach a high $3,000 psf from around $2,100 to $2,600 psf now but even if so, it would take around 12 to 18 months, said Savills.