Singapore Office Rents

Singapore Office Rents Rose 4.6% In Q3, Says URA

SINGAPORE – Office rents in the city-state’s central region increased by 4.9 percent quarter-on-quarter in Q3 2023, exceeding the 2.3 percent quarterly uptick seen during the second quarter, according to the latest real estate statistics published by the Urban Redevelopment Authority (URA) on Friday morning (27 October, SGT).

On a year-on-year basis, Singapore office rents expanded by 18.54 percent in the third quarter.

Tay Huey Ying, Research Head at Jones Lang LaSalle (JLL), told The Business Times that she believes the office rental growth was largely due to leasing transactions signed several quarters ago when occupier demand was strong, underpinned by the growth in the tech sector.

Knight Frank’s Head of Research Leonard Tay noted that the increase in Singapore office rents was not stopped by the slowing and uncertain economy. With office stock in the city-state’s central business district (CBD) expected to remain tight in 2024, tenants were also more inclined to renew their rental contracts as it was more cost efficient than relocation.

As for the overall office vacancy in Singapore, the latest URA data showed that it fell to 10 percent at the end of September from 10.8 percent in Q2 2023 and 11.7 percent at the end of the third quarter of 2022.

In particular, the amount of leased office space rose by 23,000 sq m (nett) in Q3 2023, down from the 30,000 sq m occupied office space during the prior quarter. Also, 42,000 sq m of workspace was taken out of the existing office supply versus a 7,000 sq m reduction in office stock in Q2 2023.

Meanwhile, prices of office properties across Singapore’s central region edged up by 0.8 percent quarter-on-quarter in Q3 2023. This is slower than the 1.0 percent quarterly uptick during the second quarter. Compared to the third quarter of 2022, prices of office buildings rose by 5.54 percent.

Knight Frank’s Tay revealed that there were no major office investment deals in Q3 2023, as the high interest rate environment may have prevented institutional investors from acquiring big-ticket office assets here. “Most investors have adopted a wait-and-see approach, until such time as the market re-prices,” he noted.

At the end of Q3 2023, overall upcoming office stock reached around 1,097,000 sq m by gross floor area (GFA). This is higher than the 927,000 sq m supply pipeline recorded during the preceding three-month period and the 858,000 sq m witnessed in Q3 2022.

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