The supply of prime office spaces in Singapore is set to increase this year, with new developments expected to be completed. Among these are the IOI Central Blvd Towers at 2 Central Blvd, which will add 1.26 million sq ft of office space, and the 33-storey Keppel South Central located on Hoe Chiang Road in Tanjong Pagar.
The recent increase in office rents has been driven by lease renewals, keeping occupancy rates tight at 95.6% in the Raffles Place and Marina Bay precincts, and 94.7% across the overall CBD. Calvin Yeo, managing director of tenant strategy and solutions at Knight Frank Singapore, notes that these renewals were negotiated at slightly higher rents, as companies chose to stay put rather than relocate or expand, to avoid capital expenditure.
Emerald of Katong project details
In the Raffles Place and Marina Bay precincts, prime office rents rose to approximately $11.20 per sq ft per month in 1Q2024, reflecting a 0.6% increase quarter-on-quarter, according to a report by Knight Frank Singapore released on March 25.
Looking ahead, Yeo suggests that businesses should approach the year with “cautious optimism,” given that geopolitical tensions pose a significant risk to business growth and operations. He also expects occupancy levels in premium office buildings to remain strong, bolstered by Singapore’s low unemployment rate and its position as a leading business hub. Knight Frank forecasts that rents could increase moderately by 1% to 3% in 2024.
Yeo further highlights that demand for prime office spaces remains robust as Singapore continues to attract global companies, thanks to its skilled workforce, tax incentives, diversified economy, and modern infrastructure.
However, he cautions that office rents could stabilize in the second half of 2024, as tech companies and global banks may lay off staff and consolidate operations, potentially leading to some office space being returned to the market upon lease expiry.