Better quality and well-located offices continue to outperform the market

• Despite ongoing economic challenges dampening business confidence, some companies are capitalising on the current market opportunities to upgrade to higher-quality space or more desirable location.
• The newly completed Keppel South Central and the upcoming Shaw Tower, which is set for completion in 2026, secured their first tenants, namely Manulife and The Great Room, respectively.

A brief respite before office supply tightens again

• Keppel South Central, completed in February 2025, is the sole CBD office project slated for completion this year.
• Office supply will tighten from Q2 2025 to 2027. Recent extension and modifications of the CBD and Strategic Development Incentive Schemes may prompt more property owners to pursue rejuvenation, further reducing office stock in the near- to medium-term.

Modest office rent and capital value growth stretches into its fourth straight quarter

• Singapore’s office rents continued their subdued trajectory into Q1 2025, registering a fourth consecutive quarter of marginal growth, less than 1% quarter-on-quarter.
• Capital values stayed flattish in Q1 2025 as muted rental growth and the tight gap between office yields and interest rates continued to deter institutional investors from active participation in the office investment sales market.

Outlook: Office rents and capital values to remain stable or show modest growth

• Despite recent market sell-down, office demand should stay positive, driven by supportive government policies and businesses seeking to capitalise on Southeast Asia’s growing need for wealth management, fintech and AI solutions.
• Positive demand and limited new supply are expected to keep office rents and capital values on a stable to modest growth path over the next 12 months, barring any unforeseen economic shocks.