The relocation trend with rightsizing remains unchanged

• Early in 2025, the market showed positive net demand, with absorption reaching approximately 13,000 sqm. Also, flight-to-quality from non-CBD areas to CBD areas was observed, with relocation and rightsizing in Grade A buildings.
• The financial services sector continued to account for the largest portion of office space demand in terms of size, followed by the e-commerce and technology sectors. Additionally, a flex space operator committed to opening a new centre in a Grade A building.

No new buildings were completed in Q1 2025

• No new supply was completed in Q1; however, the current market dynamics may present favourable conditions for existing buildings to increase occupancy rates, as we expect no new supply for the entirety of 2025.
• The Grade A occupancy rate was 65% in Q1, showing a slight improvement of 0.3 ppt compared to the previous quarter. This marginal decrease in vacancy can be attributed to the limited introduction of new office spaces throughout the year.

Rents showed a slight positive improvement at around 0.8% q-o-q

• Grade A rents showed a positive trend in early 2025, increasing by 0.8% q-o-q. This is in line with the generally optimistic rent projections for 2025.
• Some landlords with relatively high occupancy rates have begun to adjust their rents upward slightly from recent levels. At the same time, landlords with higher vacancy rates maintained competitive pricing to attract new tenants.

Outlook: Looking ahead, the market is set to face tight, limited new supply through 2025 and 2026

• The vacancy rate is projected to decrease slightly to approximately 34% by end-2025, due to the absence of expected new completions and gradual demand improvements.
• The trends of flight-to-quality with relocation and rightsizing are anticipated to persist throughout 2025 due to cost-efficiency strategies.