Singapore office rental index jumps 4.9% in Q3

Rents have now grown by 12.8% in the first nine months of the year.

Singapore’s office rental index increased by another 4.9% q-o-q in Q3 2023, following the 2.3% q-o-q growth in Q2 2023. According to Knight Frank, the slowing and uncertain economy did not deter office rents from holding up, rising 12.8% in the first nine months of 2023 based on the index. 

Here’s more from Knight Frank:

As the supply of office space will remain tight especially in the Central Business District (CBD) until next year, most office occupiers in quality office buildings were generally more inclined to renew their rental contracts due to cost efficiencies compared to relocation throughout all of 2023.

Post-pandemic, the office as a relevant focal point for workplace productivity remains critical for many aspects of business operations, thereby keeping occupancy levels tight at 90.0% in Q3 2023. 

With the recent outbreak of violence in the Middle East, businesses have been grappling with global economic headwinds and escalating geo-political tensions without respite. As such, office rent growth might mellow as the year closes, even though occupancy levels are expected to remain tight.

The office price index increased marginally by 0.8% q-o-q in Q3 2023, lower than the 1.0% q-o-q gain in the previous quarter.The high interest rate environment which continued to persist throughout the quarter might have kept institutional investors from purchasing, without any significant whole office building transactions in the quarter.

Most investors have adopted a wait-and-see approach, until such time as the market re-prices.