Singapore office rents improve in Q4 2021, will continue to grow: Knight Frank

Singapore office rents improve in Q4 2021, will continue to grow: Knight Frank

Jan 19, 2022

AFTER a slow start to 2021, Singapore office rents grew in Q4 and are expected to improve in 2022, Knight Frank reported in their quarterly office market update.

Prime grade office rents in Raffles Place/Marina Bay grew quarter on quarter by a sharper 1.5 per cent to S$10.13 per square foot per month from Q3 to Q4 of 2021, compared to a 0.2 per cent increase from Q2 to Q3 of 2021.

The report attributed the improvements in office rents to corporates continuing their "flight to quality", which involves the reconfiguration of offices so that less space can be used collaboratively by more staff.

"Business leaders are increasingly compelled to curate a productive, enjoyable, flexible and healthy work environment that attracts and retains talent," said the research team.

Additionally, office rents grew due to more incorporation of co-working space by occupiers of shorter-term enterprise ventures. These companies benefit from the flexible leasing commitments and use office space as part of a "distributed and hybrid workplace strategy", the report stated.

However, occupancy levels in the area declined by 1.8 percentage points in Q4 as pre-committed tenants had yet to move into the newly completed CapitaSpring.

Knight Frank nonetheless noted that overall Central Business District occupancy still remained "solid" during the latest quarter. The real estate consultancy company expects businesses to require more space in the longer term with growth and transformation in thriving sectors.

It forecasts a 3 to 5 per cent increase in office rents throughout the whole of 2022, following expected gross domestic product growth driven by new economy enterprises, the limited pipeline of office supply and greater resilience to Covid-19 in Singapore.

Upcoming office projects in the pipeline this year include the 312,660 square feet Rochester Commons in Queenstown, as well as several Downtown Core projects such as Guoco Midtown and IOI Central Boulevard Towers.

Knight Frank also highlighted that the transformation of the office market to a hybrid working environment would require employers to provide workspace flexibility and find the "best balance" between working from office and working from home.