SINGAPORE (March 14): Singapore office rents may decline as much as 25% in a prolonged slump that may last until the end of 2018, as demand slows, according to Daiwa Securities Co.

Daiwa expects 2018 to be a highly risky year for lease renewals and forecasts that rents will continue to fall until then, David Lum, an analyst at the brokerage said in a note to clients. Lum forecasts a 25 percent drop in rents from the peak in the first quarter of 2015 through the fourth quarter of 2018, while predicting office values will slide 14% during the same period.

Daiwa joins other analysts in forecasting declines for the Singapore office sector as the outlook for global economic growth remains cloudy and a large supply outstrips demand for prime space. Singapore prime office rents may fall up to 20% this year after declining 15% last year, according to Jones Lang LaSalle Inc, while office values may see similar declines as rents this year after falling 6% in 2015.

Lum downgraded real estate investment trusts tied to offices to negative from neutral, and lowered all individual stock ratings to underperform from hold. Singapore office REITs have gained 4% to 7% this year, beating the 3 percent gain in the FTSE Straits Times Real Estate Investment Trust Index and the 3% decline in the benchmark Straits Times Index.

“We are concerned that their year-to-date performances are now at odds with the deteriorating fundamentals of the office sector, ” Lum said, referring to office REITs.