Singapore Office Rents To Dip In 2024
SINGAPORE – Data from Savills showed that average rents of Grade A office buildings in the city-state’s central business district (CBD) inched up by 0.1 percent quarter-on-quarter to S$9.64 per sq ft per month in Q3 2024. However, the office rental growth is slower than the 0.7 percent uptick seen during the second quarter, reported Savills on Friday morning (20 October, SGT).
“Rental numbers in Q3 2023 support the general feeling that the office market has softened despite a lack of new supply throughout the year,” explained Savills Singapore’s Executive Director for commercial leasing, Ashley Swan.
“The continued economic uncertainty, global tensions and high interest rate environment have led to a host of occupiers delaying expansion plans, sitting tight and adopting a ‘wait and see’ approach.”
In particular, Grade A office rents in City Hall, Marina Bay, Tanjong Pagar, and Orchard Road were flat in the third quarter. On the other hand, that in Raffles Place and Shenton Way edged up by 0.1 percent on a quarterly basis, whereas that in the Beach Road-Middle Road area rose by 1.1 percent quarter-on-quarter mainly because of higher rents at Bugis Junction Towers.
During the first ninth months of the year, office rents increased by 1.1 percent. For the whole of 2023, Savills expects rents of Grade A office properties in Singapore’s CBD to climb by 2.0 percent due to a large fall in net office stock in 2022 that subsequently supported the office market this year.
However, the vacancy level of Grade A office buildings in the CBD rose by 0.6 percentage points quarter-on-quarter to 7.1 percent in Q3 2023 primarily due to the completion of Guoco Midtown.
As for the entirety of 2024, Savills expects office rents to dip by 2.0 percent to 3.0 percent year-on-year due to a looming record volume of office completions in both the CBD and outside the central business district. Upcoming office property completions next year include Labrador Tower, Paya Lebar Green, Keppel South Central, and IOI Central Boulevard Towers.
While the upcoming office supply is forecasted to decline significantly in 2025 and 2026, the fall in office stock may not be enough to “turn rents around” amidst rising business and political risks across the world, noted Savills Singapore’s Executive Director for research & consultancy Alan Cheong.
“The recent attacks on Israel’s soil and the consequent retaliatory actions may ignite Middle East flashpoints, possibly spilling over to the economic realm,” he added.