Finance, tech firms drive Singapore office demand in H1

They accounted for over half of leasing activity in the CBD.

Office demand in Singapore is being driven by the financial and technology sector as firms from these segments accounted for over half or 54% of total lease transactions in the CBD for H1 2022. 

According to Cushman & Wakefield, financial firms continue to have an appetite for office spaces in the CBD, driven by the wealth management sector as they look to set up offices in Singapore and tap on rising wealth and opportunities in Asia Pacific. Based on MAS estimates, there are about 400 single family offices operating in Singapore as at end-2020, doubling from the year before. 

Here’s more from Cushman & Wakefield:

Regional geopolitical tensions have also benefited Singapore, leading to more firms looking to establish their regional headquarters in Singapore. Professional service firms are also expanding their presence to cater to the influx of new firms in Singapore. Office-using employment is expected to rise over the next few years. Given limited CBD Grade A supply, this could lead to pockets of office spaces being able to transact at high rental levels. 

In a tech-fueled economy, the tech sector plays a key and expanding role in the office market. For example, Amazon is said to have signed a lease for 369,000 sf at IOI Central Boulevard Towers. Bytedance is also expected to take up additional office space. 

Nonetheless, tech demand could slow temporarily. The sharp rise in interest rates has roiled equity markets and saw a steep devaluation of tech companies, especially in the crypto space. Already, job cuts have been announced globally, as tech firms opt to contain costs and maintain profitability.

With tech valuations getting depressed, we could see a slowdown in office demand which is driven significantly by the tech sector. Some tech companies may look for lower-cost solutions such as business parks or decentralised offices to reduce operating costs. While others may decide to increase remote work and right-size their real estate footprints.