A report on the subject from the commercial property advisory DTZ suggests demand for prime offices in Singapore’s central business district (CBD) remained high in the third quarter of 2011 but was hindered by concerns about prospects for the global economy.
The effect was to see rents on CBD offices in Singapore remain virtually unchanged in the period, while the cost of renting space in decentralised developments fell back slightly or “moderated” in DTZ’s terminology.
“Leasing activity remains subdued as occupiers become increasingly wary of the uncertain global economic outlook,” said Cheng Siow Ying, DTZ’s regional executive director of business space.
However, there were some industries in which businesses remain keen on office space expansion in Singapore, Cheng said, pointing particularly to the IT and energy sectors.
The overall occupancy levels at purpose-built office buildings across the island remain high at 93.9 per cent after a 0.1 per cent increase in the third quarter, DTZ said.
At 4.6 per cent, Marina Bay, to the east of Singapore’s CBD, saw the sharpest rise in occupancy during the period but this increase came as certain companies relocated from other parts of the city and left sites like those in Raffles Place with fewer tenants.
“Leasing activity is expected to remain low and prime rents in the CBD are anticipated to stay unchanged for the next few quarters with longer rent-free periods being offered to attract occupiers,” said Chua Chor Hoon, DTZ’s head of South-East Asia research.
“As the pessimistic scenario of a financial contagion from the eurozone debt crisis increases in probability, the possibility of a fall in office rents has also risen.”
Raffles Place is named after the British statesman Thomas Stamford Raffles who arrived on the island in the 19th century and is generally credited with having founded the modern city, which is now one of the key financial services and logistics hubs in Asia.
Editor’s notes: In Q1 2023, prime office rental rates in Singapore were at S$10.83 per square foot per month
Office rent for prime space in Singapore had increased by approximately 1 per cent every quarter as it had done during 2022.
More and more employees were returning to the office as fewer companies were committing to a hybrid working model.
This was partly due to productivity becoming a priority in view of a deteriorating global business environment, and the recent collapses of Silicon Valley Bank and Credit Suisse have created further jitters.
As of July 2023, it was expected that Singapore would remain resilient and stable, partly due to its ability to swiftly adapt policies in reaction to global economic conditions.
There was a flight to quality in Singapore as there was with many locations around the world – companies were increasingly seeking good quality office space and this demand for quality was reflected by the occupancy rate of prime offices in the CBD of 94.1%.
As well as the continued upward pressure on rental rates for the best-in-class office space.
As of Q1 2023, Singapore had 45.85 million square feet of office space stock or 4.26 million square metres.