APPD Market Report Article

Singapore

May 31, 2022

6.9%

SGD 10.46

Rents
Rising

Office occupier demand broadens

  • Companies from the technology, consumer and non-bank financial sectors continue to drive leasing activities in 1Q22. Demand has also been broadening to encompass a wider range of industries as businesses position themselves for growth amid the recovering global and Singapore economies.
  • For example, professional services firm KPMG is reportedly taking up about 125,000 sq ft in Asia Square Tower 2 while the upcoming Guoco Midtown is also understood to have signed on more tenants in 1Q22.

Net new supply to lag demand

  • No new projects were completed in the CBD for the second consecutive quarter.
  • CBD new office completion is expected to remain limited in 2022, with Guoco Midtown being the only Grade A office project expected to come on stream during the year.

CBD investment grade rents post the fastest growth since recovery

  • Better-quality and newer office assets continued to drive rent growth and this had a knock-on effect on other office assets. As a result, overall CBD investment grade office rents recorded their third consecutive quarter of accelerated growth. Nonetheless, rents remained below their pre-COVID-19 peak.
  • CBD investment grade office capital values increased for the fourth consecutive quarter. Investors continued to be drawn to Singapore office assets in 1Q22. For example, 79 Robinson Road was acquired by CapitaLand Integrated Commercial Trust and CapitaLand Open End Real Estate Fund for SGD 1.26 billion while Twenty Anson was bought by KKR for close to SGD 600 million.

Outlook: Rents on track to double 2021’s growth

  • Singapore’s office market is expected to continue to benefit from the back-to-office recovery momentum and the reopening of international borders. Barring adverse external shocks, rent growth in 2022 is on track to double that of 2021.
  • The upbeat leasing market outlook and the rising appeal of office assets to institutional investors following the restrictions on individual strata subdivision in designated zones in the CBD is likely to help the Singapore office investment market continue to attract a wide range of capital in 2022.

Note: Singapore Office refers to Singapore's CBD Grade A office market in Marina Bay, Raffles Place, Shenton Way and Marina Centre.

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