Singapore Grade A office rents to jump by up to 30% by 2025
JLL reveals the reasons behind this optimism.
Grade A office rents in Singapore’s CBD suffered five consecutive quarters of correction before finally recording its first uptick in the second quarter of 2021.
“We are optimistic that Grade A office rents will stay on a growth trajectory over the next few years, potentially clocking a total gain of 25-30% between 2021 and 2025,” says JLL.
Here’s more from JLL:
Singapore’s CBD today is densely built and a fresh injection of office supply from greenfield sites is probably only possible on the reclaimed land on Marina Bay. These sites are only available for development through the Government Land Sales Programme.
However, the government has set its priority on developing suburban hubs to bring jobs closer to homes. Thus, we expect little or no office land releases in the CBD for the next decade.
Instead, the government will continue to encourage the rejuvenation of the CBD to reduce office space and increase more homes and hotels. This is with a view to transform the CBD into a vibrant and thriving hub that throbs 24-7.
Hence, Guoco Midtown and Central Boulevard Towers will likely be the last of fresh office injections that Singapore’s CBD will welcome over the next decade. Beyond that, new office buildings in the CBD will only be realised through the redevelopment of old buildings, which may result in a reduction in office spaces as more are converted to mixed-uses.
Consequently, the growth in the CBD Grade A office stock is estimated to plunge, from 58% (or CAGR of 4.7%) recorded in the ten years between 2007 and 2017 to 14% (or CAGR of 1.3%) in the ten years from 2017 to 2027. We expect CBD Grade A office stock to hold relatively steady from 2027 onwards, should there be no further land releases for office developments in the CBD.
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