Singapore strata office investment sales drop to S$26.8 million in Q4

There were only two transactions recorded in the quarter.

Office market conditions showed clear signs of improvement in 2025 following a slowdown in leasing sentiment the previous year, according to a new report from Savills. The rebound was most evident from the second quarter onwards, as occupiers increasingly prioritised high-quality space amid tight supply and improving market fundamentals.

Savills noted that leasing sentiment in 2024 had been dampened by layoffs in the tech sector and heightened global economic uncertainty. However, conditions stabilised and strengthened in 2025 as corporates adopted a pronounced “flight-to-quality” strategy, gravitating towards premium office buildings.

According to Savills, this trend was amplified by the limited supply of new Grade AAA office assets, with no major additions to the top-tier segment since the completion of IOI Central Boulevard Towers in 2024. Shadow space and previously vacant space in these premium buildings have largely been absorbed, and in some cases occupiers have even re-taken space they had earlier relinquished.

As a result, Savills reported that high occupancy levels in premium buildings have helped Grade AAA office rents remain firm. While the market continued to see a mix of expansion and consolidation during the quarter, Savills observed that there was no single, dominant demand driver underpinning leasing activity.

Looking ahead, Savills expects office leasing conditions to remain broadly similar to those seen in 2025. With limited new supply forecast for 2026 and 2027 and vacancy levels in premium buildings remaining low, the firm believes the flight-to-quality trend is likely to persist.

Investment activity remains robust despite Q4 pullback

Savills also highlighted strong performance in the office investment sales market, despite a slight moderation in activity in the fourth quarter of 2025. After reaching a record high in Q3/2025, investment volumes eased in Q4 but remained well above levels recorded earlier in the year.

According to Savills, investment activity continued to be supported by lower financing costs and solid underlying fundamentals. S-REITs were the most active buyers, pursuing strategic, portfolio-enhancing acquisitions.

A standout transaction during the quarter was the sale of a one-third interest in Marina Bay Financial Centre Tower 3 by Hongkong Land to Keppel REIT for S$1.45 billion. Savills noted that this was the largest office investment deal not only in Q4/2025 but for the whole of 2025.

Combined with Keppel REIT’s existing one-third stake, the acquisition increased its interest in the property to two-thirds. Savills highlighted that the purchase price reflects approximately S$3,268 per sq ft, based on the building’s net lettable area of more than 1.3 million sq ft.

The transaction followed Keppel REIT’s earlier acquisition of a 55% stake in the commercial component of CapitaSpring in Q3/2025, further underscoring the strong appetite from institutional investors for prime office assets, according to Savills.

Strata office market sees sharp slowdown

In contrast to the institutional investment market, Savills reported that strata office activity was significantly more subdued in Q4/2025.

The number of strata office transactions fell sharply from six in Q3/2025 to just two in Q4/2025, with total strata investment sales volume plunging from S$196.9 million to approximately S$26.8 million.

Of the two transactions completed, Savills noted that the larger involved the sale of four units at Prudential Tower for S$16.2 million, translating to about S$2,725 per sq ft based on a combined strata area of 5,952 sq ft. This marked the first transaction in the building since Q3/2024, when a first-floor unit was sold for S$26.5 million, or S$4,636 per sq ft on a strata area of 5,716 sq ft.

Overall, Savills said the divergence between strong institutional demand for prime assets and weaker strata office activity highlights the market’s continued preference for quality, scale and long-term resilience.