What drives the ebb and flow of office rents in Singapore’s Central Business District (CBD)? In the first quarter of 2025, the average rent for Grade A offices in this bustling area held steady at SGD 11.67 per square foot per month. This figure, while seemingly stable, represents a modest quarter-on-quarter rental growth of just 0.5%, a continuation of the similar growth trends observed throughout 2024.
Factors influencing this gradual increase include an uptick in demand across banking, technology, and professional services sectors, which have bolstered leasing activity.
An increase in demand from banking, technology, and professional services sectors is driving leasing activity in Singapore’s office market.
Interestingly, the vacancy rate for Grade A offices in the CBD rose slightly to 8.1%, primarily due to the completion of a new office building called Keppel South Central. Despite global economic uncertainties and geopolitical tensions influencing corporate expansion, many firms are adapting, thanks in part to flexible work arrangements implemented at the end of 2024. Notably, the rising vacancy rates have potential implications for future rental prices as companies remain cautious in their space planning.
These policies have played a vital role in stabilizing office attendance, enabling businesses to rethink their workspace needs.
Moreover, the appetite for high-quality office spaces has led to a “flight to quality” trend. Companies are keen on attracting and retaining talent, prompting a shift towards more premium office environments. This pivot is also supported by organizations optimizing their operations, either by resizing or relocating to more efficient spaces.
On the flip side, rising geopolitical tensions and trade issues have stymied more significant increases in rental prices. Landlords have focused on maintaining high occupancy rates rather than aggressive rent hikes. This tenant-friendly approach has helped sustain market stability within an environment characterized by uncertainty.
Looking ahead, it seems that Singapore’s office market is poised for gradual recovery, with expectation for stronger growth in the latter half of 2025. As more firms reconsider their in-office work strategies, demand could shift favorably, potentially enhancing the vibrancy of the CBD office rental landscape. Moderate economic growth in 2025 is also expected to support office demand, further influencing rental rates positively.
