APPD Market Report Article


December 1, 2021


SGD 10.1


Demand continues to be driven by flight-to-quality and efficiency

  • Market sentiment had generally stayed positive in 3Q21 despite another round of Phase 2 (Heightened Alert) from 22 July to 18 August 2021, as over 80% of Singapore’s population had achieved full vaccination status by September 2021. Leasing activity was driven by tenants moving out of buildings slated for redevelopment or major refurbishment works.
  • For example, at Singapore Land Tower where refurbishment works could last for about two years, law firm Lee & Lee reportedly secured a lease to move to 25 North Bridge Road, a premises that is located closer to the Supreme Court building and will allow Lee & Lee to experiment with a hybrid work model while fitting out their new space.

Newly completed projects are approaching full commitment rates

  • In 3Q21, refurbishment works were completed at 21 Collyer Quay, while the office component of the integrated development at CapitaSpring received its Temporary Occupation Permit. Both buildings are located in the Raffles Place submarket. On the withdrawal front, Fuji Xerox Towers was withdrawn in 3Q21 after all tenants vacated the building due to redevelopment works.
  • As of 3Q21, over 85% of the 0.8 million sq ft of office space from new buildings such as Afro-Asia and CapitaSpring have been pre-committed, up from about 70% in 2Q21. 21 Collyer Quay remains 100% committed to WeWork who has pushed back the opening of its new facility from end-2021 to mid-2022.

Rents rise for the second consecutive quarter

  • Office rents continued to rise in 3Q21, after turning around in 2Q21. The rent recovery continued to be led by the better quality and newer office assets.
  • Capital values of CBD investment grade offices climbed at the fastest pace in ten quarters, supported by continued competition for office assets as well as the recovery of office rents.

Outlook: Rents and capital values to see stronger growth in 2022

  • Rent recovery is expected to gain momentum in 2022 as demand strengthens on the back of business expansion, particularly in growth sectors such as the tech, asset management and healthcare-related sectors. Tightening supply owing to limited new project completions, construction delays and probable supply withdrawal due to the redevelopment of aged office assets would also underpin rent growth.
  • Recovering office rents and the continued low interest rate environment should drive stronger capital value growth in 2022. Singapore remains appealing to global investors seeking defensive assets in the present uncertain economic climate due to its stable political system, relatively resilient currency as well as its strategic decision to transit to living with endemic COVID-19.

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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