Singapore Office Rents Resume Growth Cbre
Singapore has experienced a surge in office rents, marking a significant turnaround after four consecutive quarters of stagnation, according to research conducted by CBRE. In the first quarter of 2025, gross effective rents for core Central Business District (CBD) Grade A offices, which are closely monitored by the firm, rose by 0.8% to reach $12.05 per square foot (psf) per month.
CBRE notes that there has been a slight increase in vacancies as a few large occupiers have chosen not to renew select spaces or leases. This includes Meta, which opted not to renew its lease on seven floors at South Beach Tower, and Morgan Stanley, which moved its Southeast Asia headquarters from Capital Square to IOI Central Boulevard Towers. As a result, there has been a negative net absorption of 0.15 million square feet in core CBD Grade A offices in the first quarter of 2025.
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However, Tricia Song, head of research for Singapore and Southeast Asia at CBRE, points out that there is still high demand for office spaces in prime locations with premium specifications. She notes that this can be seen in the low vacancies in buildings that meet these criteria, as well as the consistently record-breaking rents for unblocked views within such buildings.
David McKellar, CBRE’s head of office services for Singapore, predicts that the supply and availability of prime offices in the core CBD will tighten in the coming quarters. He notes that IOI Central Boulevard has already achieved an occupancy rate of over 80%. With the next completion (Clifford Centre) not expected until 2028, landlords are likely to be emboldened and stand firm on their asking rents.
CBRE forecasts a rental growth of between 2% and 3% for core CBD Grade A offices this year, surpassing the 0.4% growth seen last year. However, the firm remains cautious due to the escalating global trade conflicts that could dampen business sentiment and trade. Song explains that the current global economic uncertainties may cause occupiers to delay their decisions on market expansions and instead focus on renewals. However, she believes that demand will remain resilient in Singapore, given its political neutrality and stable government policies.
In the investment market, office transactions totalled $159.33 million in the first quarter of 2025, a decrease of 80.8% from the previous quarter. Despite this drop, office investment volumes continue to recover from the 15-year quarterly low of $69.72 million seen in the first quarter of 2024, according to CBRE. The largest office transaction in the last quarter was the sale of the top three floors at 20 Collyer Quay for $91.8 million.
Michael Tay, CBRE Singapore advisory deputy managing director and head of capital markets, Singapore, believes that the uncertainties caused by the trade war and potential recession in the US may prompt the Federal Reserve to make rate cuts, leading to a resurgence in interest in the office sector. He adds that Singapore is likely to stand out as a stable and attractive real estate investment market amid the increased uncertainty in other global markets. Additionally, the recent extension of the Central Business District Incentive (CBDI) and Strategic Development Incentive (SDI) schemes should attract investors and developers to development projects.