Knight Frank observes that Singapore’s office market rents were largely stable in the first half of 2025, with occupancy levels tightening and rental recovery slowing as macroeconomic uncertainties prevail. This is reflected in the 0.3% fall in overall office rents in 2Q2025, erasing the marginal quarterly gain recorded in the first three months of this year. On a year-on-year basis, the rental performance of the office market contracted 1.4%. This is the first annual decline the office market has registered since 3Q2021, according to the latest URA statistics published on July 25. AdvertisementMost tenants opted to renew leases in the first half of this year, rather than expand or relocate, in light of high office fit out costs, says Leonard Tay, head of research at Knight Frank Singapore. Moreover, the latest office market figures released by URA indicate that office rents in the Downtown Core and Orchard Road Planning area declined 3.2% q-o-q to $11.68 psf/per month in 2Q2025, down from $12.07 psf/pm in the first quarter of this year. On the other hand, office rents outside of the Downtown Core and Orchard Road registered its third consecutive quarterly increase, with median rents rising 2.7% q-o-q in 2Q2025 following a 1% q-o-q increase in 1Q2025. This is largely due to the cautious sentiment among tenants and landlords amid ongoing macroeconomic uncertainty, says Tricia Song, head of research, Southeast Asia at CBRE. She adds that cost-efficient buildings are gaining favour among most tenants. Looking ahead, some landlords have begun to carve out smaller spaces to rent or offer a variety of incentives, such as in the case of IOI Central Boulevard Towers, which is near full occupancy. However, large corporations are unlikely to make significant office relocation plans in the coming months, while small- and medium-sized companies may make selective flight-to-quality moves to capitalise on the current rental environment, according to Catharine He, head of research, Singapore, at Colliers. With the supply of new office space expected to be relatively muted until 2028 when around 3.08 million sq ft is set to enter the market, vacancy rates look set to tighten over the next two years. However, the latest extension to the CBD Incentive scheme and Strategic Development Incentive scheme leaves open the possibility that some office supply may be redeveloped into future mixed-use projects, says He. Overall, the Singapore office market seems to be experiencing a period of stabilisation and muted growth, as landlords focus on maintaining high occupancy rates in light of global uncertainties.
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