Singapore prime office rents soared to highest levels since 2008

SINGAPORE: Singapore prime office rents soared to highest levels in 15 years during the first quarter, bucking the downward trend seen in other major financial centres.

Yahoo Finance reports on data released on Wednesday by Jones Lang LaSalle Inc. revealing that gross effective monthly rents for prime office spaces in the central business district of the city hit S$11.42 per square foot in the first three months of the year.

This marks the highest figure since the final quarter of 2008, reversing a slight dip of 0.5% experienced in the preceding two quarters.

While commercial real estate markets in many Western cities and regional competitors like Hong Kong are grappling with a slump, Singapore has managed to dodge a major downturn. This is supported by a widespread return-to-office movement and a surge in private wealth.

Mr Andrew Tangye, who heads office leasing and advisory for JLL Singapore, noted an uptick in enquiries. He said, “These are stemming from firms in professional and financial services as well as the consumer goods sectors.”

Additionally, prime office space vacancies reached a post-pandemic low of 5.3% in the first quarter, down from 5.5% in the preceding three months.

Mr Tangye pointed out that while most leasing activity is driven by small-to-mid sized tenants, demand from larger occupiers remains subdued. For instance, Meta Platforms Inc. is set to reduce its Singapore footprint in the latter half of the year.

Meanwhile, separate data from CBRE Group Inc., also released on Wednesday, showed a continual increase in monthly prime office rents in the core central business district. Rents rose for the 12th consecutive quarter to S$11.95 per square foot.

However, CBRE cautioned that sectors such as technology and banking might witness office requirements consolidation following layoffs.

Looking ahead, JLL estimates that tenants have yet to be secured for over 1.5 million square feet of office space set to come online in 2024 and 2025.

Furthermore, estimates from the Urban Redevelopment Authority suggest that more than three million square feet (300,000 square meters) of office space will be completed this year, surpassing last year’s market entry by more than threefold. /TISG

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