Singapore Prime Office Rents Down 0.3% In 2021

SINGAPORE – Prime office rents in the city-state edged up by 1.5 percent on a quarterly basis to S$10.13 psf per month in Q4 2021 following a 0.2 percent uptick in the prior quarter, according to Knight Frank’s latest quarterly office market update published on Tuesday afternoon (18 January, SGT).

But while prime office rents in Singapore dipped 0.3 percent for the whole of 2021, it’s an improvement from 10.2 percent contraction recorded in 2020 and office rents are forecasted to perform better this year.

“Prime Grade office rents in the Raffles Place / Marina Bay precinct recorded a second consecutive quarter of marginal growth in Q4 2021 after being sluggish in 2020 and the first half of 2021,” revealed the property consultancy.

One of the factors that helped increase office rents is the trend of “flight-to-quality” as businesses increasingly lease better but less workspace that can be used more collaboratively, before office rents in Singapore begin to increase significantly.

With 47 percent of global respondents in Knight Frank’s workplace report Y(our)Space 2021 expecting the quality of their office space to increase in the next 3 years, executives are increasingly compelled to secure a “productive, enjoyable, flexible, and healthy work environment that attracts and retains talent.”

About 69 percent of Y(our)Space respondents also expect to resize their office portfolio by over 10 percent as the workspace needed by companies will be recalibrated to cater to hybrid work. Still, 90 percent of those polled still deem the office as a “strategic business device”.

Moreover, Knight Frank also said that there was a moderate 1.8 percentage point dip in the Q4 occupancy levels in Raffles Place / Marina Bay precinct to 91.8 percent, primarily because of the completion of CapitaSpring.

While the building is already 90 percent pre-committed, many of the occupants have yet to move in. New tenants include Pramerica Financial Asia, which leased 10,000 sq ft, Southern Ridge Capital relocated to CapitaSpring, and investment-management company Millennium Capital expanded to occupy 60,000 sq ft. Separately, LinkedIn rented an additional 22,000 sq ft in MBFC Tower 2.

“Even amid the general shrinkage in office space usage due to flexible workplace mandates driving the ongoing workplace revolution, the overall CBD occupancy remained solid at above 90 percent,” added Knight Frank.