Singapore’s Office Market

Bright Outlook For Singapore’s Office Market

SINGAPORE – The city-state’s office property market has many things to look forward to next year, reported The Business Times on Tuesday morning (28 December, SGT).

For instance, owners of office properties here are expected to benefit from the easing of workplace restrictions next year, with 50 percent of staff who can work from home (WFH) allowed to return to their office as long as they are vaccinated.

However, Singapore’s office market is becoming bifurcated: Top-notch office spaces are flourishing, while lower quality office buildings are struggling, said Colliers.

In fact, based on the property consultancy’s data, the rental gap between Grade A and Grade B office space in the central business district (CBD) has been widening over the past few years. In 2015, the premium of Grade A office rents over its Grade B counterpart was just 12 percent. But during the 3rd quarter this year, it reached about 19 percent.

“Singapore office rents, especially for Grade A offices, are poised to regain upward momentum, supported by economic recovery and steady demand from companies,” said GuocoLand when it replied to questions during its annual general meeting (AGM) in October. Notably, it owns office assets like Guoco Tower.

Meanwhile, City Developments (CDL) revealed that its flagship Grade A office building Republic Plaza continued to see positive rental reversion in Q3 2021, with a committed occupancy of almost 95 percent. The developer said the demand for office space is being driven by tech and fintech firms, family offices, and wealth managers.

Similarly, the manager of Suntec REIT stated in its Q3 update that Singapore office rents are expected to continue rebounding, bolstered by limited new stock and demand from sunrise industries, like tech, media, health-care, financial services, and telecommunications.

In particular, tech giant Amazon recently opened its corporate office in Singapore within Marina Bay area’s Asia Square building. The new workspace is located on 3 levels collectively measuring 100,000 sq ft and can accommodate a maximum of 700 staff.

Other tech behemoths like Twitter, LinkedIn, and ByteDance have also been leasing Grade A office space within Singapore’s CBD.

Meanwhile, there are more acquisitions of office properties here. For instance, the sale of a half-stake in One George Street, a Grade A office tower in the CBD, for S$640.7 million was completed earlier this month. Last week, it was reported that Robinson 112, a freehold office building in the CBD, is being acquired for almost S$269.7 million.

Furthermore, major office landlords are carrying out asset enhancement initiatives (AEI). Singapore Land Group started upgrading Singapore Land Tower early this year, so that it will come with more eco-friendly features like landscaped public spaces, parking for electric hybrid cars, energy-efficient lifts and lightings, as well as a low emissivity double-glazed external curtain wall system.

Likewise, CDL is redeveloping its former Fuji Xerox Towers located at Anson Road under the CBD Incentive Scheme. Subject to approval of the government, the proposed redevelopment will consist of a 45-storey mixed-use development with office space, retail premises, residential units, and serviced apartments.

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