Singapore CBD Grade A office rents rise for third straight quarter in Q4

Rents increased by 0.6% during the quarter.

According to a Savills report, with vacancies of most office buildings in Singapore largely remaining low, landlords are generally holding up asking rents. Nevertheless, landlords of certain buildings which have higher vacancies lowered their asking rents to retain existing tenants or attract new tenants.

“Overall, the average monthly rents of overall CBD Grade A offices in Savills basket continued trending up for a third consecutive quarter, increasing at a faster pace of 0.6% QoQ to S$9.79 per sq ft. This brought the increase in office rents to 1.1% for the whole of 2024, a slightly moderated pace compared to 1.2% in 2023,” the report said.

Here’s more from Savills:

By grade, QoQ growth was recorded for offices of all grades for a third consecutive quarter with the pace of growth being fastest in the last quarter of the year. Rents of Grade AA offices recorded the largest increase, by 1.0% QoQ to S$10.73 per sq ft. This was larger than the 0.4% growth in the previous quarter and the fastest increase since Q2/2019 when rents rose 1.3% on a QoQ basis.

Rents of Grade AAA offices rose by a slightly faster 0.7% QoQ, compared to the 0.6% in Q3/2024, to S$12.91 per sq ft, the highest since Q1/2020 when rents reached S$12.99 per sq ft. Similarly, rents of Grade A offices grew 0.3% QoQ to S$8.68 per sq ft. As such, for the whole of 2024, rents of Grade AAA offices recorded the largest increase across the three gradings of CBD Grade A offices, growing 1.6%. This was relatively similar to the 1.5% increase for 2023.

Grade AA offices followed next, growing 1.4% YoY in 2024, a faster pace than the 0.9% in 2023. On the other hand, the rents of Grade A offices registered a smaller pace of growth in 2024, increasing 0.7% as compared to the 1.2% in 2023. This may be due to tenants favouring the more premium and newer office spaces, resulting in a larger increase for the Grade AA and AAA offices.

Across the submarkets, apart from Orchard Road where there was no change in office rents for the fourth consecutive quarter, the other submarkets registered quarterly increases in rents. Rents of offices in Marina Bay recorded the largest growth of 1.0% to S$12.83 per sq ft in Q4/2024. This was the third consecutive quarter of increase. This was followed closely behind by Raffl es Place, where rents rose 0.8% QoQ to S$10.12 per sq ft, the highest since Q1/2020 when rents reached S$10.17 per sq ft. The other submarkets registered quarterly increases between 0.4% and 0.7%. 

For Shenton Way, the increase in Q4/2024 came after five consecutive quarters of no rental movement. Hence, for the whole of 2024, except for Orchard Road, rents of Grade A offices in all submarkets continued to increase. Compared to 2023, rents of most submarkets increased at a slower pace, except for City Hall, Tanjong Pagar and Marina Bay. The largest YoY growth in rents came from Marina Bay, with rents increasing 1.4% for the whole of 2024.