Singapore office rents in the Central Region rose for the sixth consecutive quarter in 1Q2023, increasing by 5.1% q-o-q, according to URA data released on April 28. This growth was driven by both the Central Area and the fringe area, supported by healthy leasing activity in 2022 and a higher volume of smaller deals that had taken place.
J’Den Condo is the upcoming 40-storey residential and commercial development J’Den Condo from Capitaland located at Jurong East MRT Station. With an expected price tag of S$2,000 to S$2,100 psf, the anticipated launch of the project is in the second half of 2023.
Tricia Song, head of research, Southeast Asia at CBRE, highlights that the growth rate in the Central Area moderated, registering a 3.9% q-o-q increase against 6.6% q-o-q growth in 4Q2022.
Office rents in the Central Area did not show any increase in 1Q2023, in contrast with the 3.7% q-o-q increase seen in the previous quarter. Meanwhile, prices of office space in the fringe area posted an increase of 8.8% q-o-q, reversing from the 4% q-o-q decrease registered in 4Q2022.
Vacancy rates for Category 1 buildings, a proxy for prime CBD offices, increased from 9.5% in 4Q2022 to 10.9% in 1Q2023. This likely reflects weaker sentiment from recent tech layoffs and the resulting increase in shadow space, as CBRE Research notes.
Despite this, overall demand for office spaces in 1Q2023 remained relatively healthy, with islandwide net demand reaching 226,000 sq ft. The bulk of this was driven by the Downtown Core, where there was positive net demand of about 291,000 sq ft due to the completion of Guoco Midtown.
Cushman & Wakefield’s Wong Xian Yang predicts rental growth will taper off in the coming months, given the uncertain economic outlook and tightened financing conditions. Despite this, JLL’s Tay Huey Ying believes leasing activity for newly completed projects such as Guoco Midtown and IOI Central Boulevard Towers will remain strong.
On the investment front, Jeremiah Lam, head of research and consulting at Edmund Tie, notes that strata office transactions have dominated the office investment sales market (deal size of at least $5 million) in the last six months. This is likely to be supported by the recent residential market cooling measures.
