While global economic uncertainties continue to exert pressure on commercial real estate markets worldwide, Singapore’s Core CBD office rents demonstrated minimal growth in Q1 2025, marking the fourth consecutive quarter of flat or negligible rental increases. Grade A office space in the central business district reached SGD 11.60 per square foot per month, reflecting a modest 0.5% quarter-on-quarter increase, following the broader trend of decelerating rental momentum that characterized the market throughout 2024.
The annual rental growth for 2024 closed at just 1.1%, considerably lower than the 2.4% growth recorded in 2023, indicating landlords’ prioritization of tenant retention over aggressive rent escalation amid persistent economic challenges. Vacancy rates exhibited some fluctuation, improving to 8.1% in Q1 2025, despite temporary pressure from the completion of new supply, especially the Keppel South Central development which added substantial square footage to the market. The increase in vacancy rate is directly attributed to the completion of Keppel South Central.
Geopolitical tensions, trade uncertainties, and ongoing corporate restructuring initiatives have collectively dampened expansion plans across multiple sectors, with firms adopting increasingly cautious approaches to their real estate requirements. The integration of artificial intelligence technologies into workflows has further complicated space planning decisions, with many organizations postponing considerable changes until later in 2025 or beyond as they assess the implications for their spatial needs and workplace strategies. This cautious approach is evident as many tenants are reluctant to expand or relocate, preferring to renew existing leases instead.
Market stability has been partially underpinned by the relatively limited new supply projected for 2025, estimated at approximately 553,000 square feet, which has helped landlords manage vacancy rates more effectively. Positive demand indicators remain evident in specific sectors, particularly from global firms targeting Southeast Asia’s growing fintech, technology, and wealth management industries, which continue to view Singapore as a strategic regional hub.
Analysts project that rental rates will likely maintain their current plateau into late 2025, with potential recovery contingent upon strengthening global demand conditions in the latter half of the year, particularly if economic headwinds subside and corporate confidence returns to fuel more robust expansion activities within Singapore’s premium office market.
