Singapore's office demand and rental rates are not expected to rebound until later this year.

Singapore's office market is projected to stay sluggish with subdued demand and rental rates until later in the year. Economic factors and ongoing uncertainties contribute to the delayed recovery, indicating a prolonged period of stagnation for the sector.

Analysts expect demand to remain muted in the near term.  

According to the Monetary Authority of Singapore, the economy is projected to grow at 2.4% in 2024, a substantial improvement from the 1.1% recorded during 2023. 

As such, Colliers analysts say office demand and rents are likely to recover in tandem in the later part of the year.

Here’s more from Colliers:

Landlords may face increasing competition in the near term with the build-up of more space availability, thereby providing more options to tenants. In 2024, 1.26 mil sq ft of prime office space will come on stream from IOI Central Boulevard Towers, with the completion of Keppel South Central delayed to 2025 taking some pressure off overall CBD vacancy levels.

Further, the guidelines on flexible work arrangements will become compulsory for employers to follow in 2024. As such, more firms may right-size according to their work arrangements and corresponding space requirement.

Several buildings in the CBD Grade B segment have also undergone Asset Enhancement Initiatives (AEI), and thus are able to command higher rents and provide viable alternatives to tenants looking to be centrally located.

While interest rates have peaked and are expected to be lowered during 2024, occupiers are still taking a wait-and-see approach, managing financial risks in the current climate by holding back on capital investments and expansion plans. As such, office demand is set to remain muted in the near term.

Source: Real Estate Asia