Singapore office rents won’t rise until H2 2025

Total rental growth is expected to range between -1% and 2% for the full year.

In a recent report, Knight Frank noted that Singapore’s Gross Domestic Product (GDP) expanded 5.4% y-o-y in Q3 2024, exceeding the 3.0% y-o-y growth in both Q1 and Q2 2024.

With the combined economic performance for the three quarters better than expected, the Ministry of Trade and Industry (MTI) expects Singapore’s economic expansion at around 3.5% for the whole of 2024, with the economy in the remaining months of the year supported by recovery in global electronics. In 2025, as interest rates continue to decline, MTI expects the economy to grow between 1% and 3%, held in check by global volatility.

Here’s more from Knight Frank:

While economic growth performed better than expected in 2024, geo-political tensions have not abated and have arguably increased as the year draws to a close, especially with greater uncertainty in the Middle-East and the ongoing conflict in Ukraine. A second Trump presidency with warning shots of more tariffs and protectionist policies might affect businesses all over the world, affecting the flow of trade and the global economy.

On the domestic front, most major global corporations that are headquartered in Singapore offices are likely to adopt a wait-and-see approach until there is more clarity before deciding on expanding or relocating their workplaces, at least for the first half of 2025. At the same time, some businesses are expected to continue relocating in measured flight-to-quality moves from ageing buildings as and when leases expire.

Knight Frank expects rents to be largely unchanged in the first half of 2025, with some growth projected in the second half once the world adjusts to the combination of the above factors. As such, office rental growth is likely to range between -1% and 2% for the whole of 2025.