2025-03-26-莱坊-Singapore_Office_Market_Update_Q1_2025_2页_8mb

Singapore Commercial Real Estate Market Analysis (Q1 2025)

Introduction

Despite a tentative economic outlook, Singapore remains an attractive commercial hub in the Asia Pacific region.

Recent Developments

• New Office Setups: Coller Capital established a new office in Marina Bay Financial Centre. Co-working space operator The Great Room opened a 36,000 sf space at Shaw Tower, targeting smaller occupiers.
• Supply Outlook: The CBD office landscape will experience a supply pause after completion of IOI Central Boulevard Towers and Keppel South Central, barring development at Shaw Tower.

Economic Sentiment and Outlook

• GDP Growth: Singapore's GDP grew 4.4% in 2024. Growth is expected to be more subdued in 2025 due to global uncertainty exacerbated by trade tariffs and corporate retrenchment.
• Corporate Strategy: Major global corporations headquartered in Singapore are likely to hold expansion/relocation plans due to uncertainties in the global environment.

Rent and Occupancy Trends

• Prime Grade Rents: Held steady at S$11.36 psf pm in Q1 2025, a slight increase y-o-y from 2024 (from 1.4%).
• CBD Occupancy: At 93.5% (an increase of 1.4 pp q-o-q), slightly up from 93.7% in Q1 2024. Rents are not increasing significantly despite tight occupancy levels.
• Grade A + Rents: Held at $12.20–$12.70 pm across various precincts, with slight variations and moderate growth in specific areas like Orchard Grade A ($9.15-$9.65 pm).

Relocation Strategies

• Flight-to-Quality: Some occupiers are considering right-sizing and moving to newer, better quality spaces due to uncertainty. While costs may not be justified for all, subsidies and fit-out incentives may influence decisions.
• Large Occupiers: Relocation is unlikely short-term for larger footprint tenants due to the rarity of available large, premium-grade floorplates.

Supply Projections

• Upcoming Projects: New office supply in key areas such as Punggol Digital District, Solitaire On Cecil, and Skywaters Shenton is scheduled throughout 2025-2028. Knight Frank forecasts prime grade rental growth in 2025 to range between -1% and 2%, reflecting cautious market sentiment.

Summary

• Singapore's stable market continues to attract businesses, though challenges arise from economic uncertainty, limited large premium spaces, and cautious corporate expansion.
• Occupiers are increasingly favouring cost-neutral strategies such as right-sizing and moving to newer facilities.
• Rents in premium areas hold steady, influenced by occupier retention and supply constraints.