Singapore’s CBD Sees 1.5% Uptick In Office Rents

SINGAPORE – Monthly rents of office space in the city-state’s central business district edged up by 1.5 percent quarter-on-quarter to S$10.05 psf in Q3 2021, according to a new report published by Jones Lang LaSalle (JLL) on Tuesday afternoon (28 S September).

The real estate consultancy pointed out that the figure is higher than the 1.2 percent quarterly growth witnessed in Q2 that reversed 5 consecutive quarters of rental declines.

“JLL is optimistic that demand for offices will remain healthy, anchored on its integral role as the primary place of work,” said Tay Huey Ying, Research Head at JLL Singapore.

Another positive sign is that Singapore’s office rental increase during the 3rd quarter was across the board in all 4 CBD submarkets monitored by JLL.

According to the property consultancy’s report entitled “Singapore Office Rents: A Long Runway For Growth”, Grade A office rents in Singapore’s CBD are projected to appreciate in the next few years, and the market could post a growth of 25 percent to 30 percent come 2025.

One factor behind the bullish outlook is that there’s likely to be a supply crunch of new sites for office developments.

“As we expect the government to focus on developing suburban hubs to bring jobs closer to homes, there is likely to be little or no office land releases in the CBD in the short to medium term,” explained Tay.

She believes that the upcoming office components of Central Boulevard and Guoco Midtown could be the last new injection of office stock on greenfield sites in Singapore’s CBD. In addition, the market could see a decline in office space, as more ageing buildings are transformed to mixed-use projects.

Consequently, the real estate consultancy increased its CBD Grade A rental projection from 2-3 percent to 3-4 percent for the entirety of this year. “With no signs of slowing rent growth, we have upgraded our full-year rent forecast marginally,” Tay noted.

“Underpinned by strong demand drivers, this also gives us much reason to believe that Singapore’s office rents will continue to make a good upward run in the near to medium-term,” she said, adding that Singapore continues to draw in tech firms, family offices, and wealth management companies.