Office Rents In Raffles Place, Marina Bay Up 1.3% In Q1 2023
SINGAPORE – Monthly rents of prime office properties in the Raffles Place / Marina Bay precinct edged up by 1.3 percent quarter-on-quarter to S$10.83 psf during the first three months the year, according to a new report published by Knight Frank on Monday afternoon (27 March, SGT).
In its Singapore Office Market Update for Q1 2023, the real estate consultancy said the uptrend in office rent continued to reflect a resilient office market, as new office supply continues to remain tight particularly in the central business district (CBD).
As a matter of fact, office occupancy rates in Marina Bay and Raffles Place remained healthy at 94.1 percent and 95.4 percent respectively during the period under review. They only saw a marginal drop from the 94.2 percent and 95.5 percent in the preceding quarter.
Knight Frank said the slight decline in office occupancy was largely because of select office properties starting their redevelopment or asset enhancement initiatives (AEIs) that resulted in the removal of office supply from the market.
“Quality office spaces remained full as businesses continued to relocate headquarter functions to Singapore, with the city state a ‘flight-to-safety’ hub amid seemingly unrelenting global disruptions,” noted the property consultancy.
Meanwhile, the tech sector is no longer expanding in Singapore as they were prior to the COVID-19 pandemic. Nonetheless, the amount of pre-terminated office space is not “significantly affecting the market at this point.”
In Singapore’s CBD, the supply of major pre-terminated office space by tech companies was relatively benign at around 100,000 sq ft. Shadow spaces that emerged were subsequently taken up by smaller occupants in flight-to-quality moves from ageing office buildings upon lease expiry.
Despite the slowdown in the tech sector, technology professionals are still in demand in other sectors, and as such maintain office space occupancy in Singapore, Knight Frank noted.
An example of flight-to-quality is Guoco Midtown, a mixed-use project that recorded an occupancy of about 80 percent during its completion in January 2023. The development features a wide array of shared amenities and communal facilities, such as sky park and pool, end-of-commute facilities, event and swing space for existing tenants, as well as a hot desking network hub exclusively for staff working there.