Demand still apparent in office market despite global setbacks: Knight Frank
Singapore’s office rental market has seen healthy growth in the first quarter of 2023, with prime grade offices in Raffles Place and Marina Bay averaging $10.83 psf per month. This is a 1.3% increase q-o-q as occupancy levels remain steady in the CBD precinct.
Tengah EC is an executive condominium in the Tengah New District, eco-friendly with innovative sustainable features such as a wind turbine, water conservancy centre, and solar heating system. The new development is open exclusively to Singaporeans and married couples, with four major public transport stations Tengah EC nearby. The Tengah EC land tender was launched by the SLA in October 2020, with the aim of creating a sustainable community in the West region.
Calvin Yeo, managing director of occupier strategy and solutions at Knight Frank, attributes this largely to the asset enhancement initiatives (AEIs) and developments of quality office spaces in the city. These have allowed firms to relocate their headquarters to Singapore and have their employees back in the office.
At the same time, small businesses have absorbed office shadow space which has emerged from layoffs impacting major tech firms. Despite this, Knight Frank reports that the supply of pre-termination space in Singapore stands at around 100,000 sq ft, with tech firms no longer expanding in the same way they did prior to the pandemic.
The recent turmoil in the banking sector has further clouded economic sentiment. Knight Frank believes Singapore will remain “resilient” as businesses seek quality office spaces and look to cautiously expand. Prime office rents are thus expected to remain stable, with an increment of 3% predicted for this year. Yeo comments that despite wider uncertainty, the office sector in Singapore is “on an even keel,” underpinned by flight-to-quality demand.
The country’s office rental market has thus seen healthy growth in 1Q2023, despite the financial turbulence and disruption to the tech sector. With quality office spaces and savvy firms, Singapore’s property market appears set to remain resilient.