Archive for category: Misc

According to Knight Frank Singapore, the demand for prime-grade office spaces in Singapore has weakened due to the current economic climate, resulting in a slower growth rate of rents. In their June research report, the consultancy revealed that rents for prime-grade offices in Raffles Place and Marina Bay increased by only 0.7% quarter-on-quarter (q-o-q) in 2Q2024, reaching an average of $11.28 psf per month. This growth rate is only marginally higher than the 0.6% q-o-q increase recorded in the previous quarter, bringing the total rental growth to 1.3% for the first half of 2024, a significant decrease from the 2.5% growth recorded in the same period last year.

Knight Frank also observed that some landlords have started to adjust their rental expectations, especially for buildings with available spaces, in response to the challenging economic conditions. Additionally, the uncertain economic outlook has led some businesses to put a hold on their expansion plans, while others are seeking more affordable office options and considering relocating once their current lease ends.

The overall occupancy rate in the Central Business District (CBD) dipped slightly from 94.7% in 1Q2024 to 93.6% in 2Q2024. The occupancy rate for Raffles Place and Marina Bay also decreased from 95.6% in 1Q2024 to 95% in 2Q2024. Knight Frank attributes this to the emergence of more decanted spaces in the market, as companies in the financial and technology sectors consolidate their business functions in a central location.

One example is Chinese tech giant Tencent, which recently relocated its staff from WeWork at 30 Raffles Place to CapitaSky on Robinson Road. Additionally, US tech giant Meta is giving up its 115,000 sq ft space at South Beach Tower, while French bank BNP Paribas is reportedly letting go of some of its space at Ocean Financial Centre. As more decanted spaces become available, landlords are facing pressure to moderate their rent expectations. On the other hand, owners of quality office assets are locking in tenants for the next few years to minimize rental income loss in the uncertain market.

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Knight Frank’s managing director of occupier strategy and solutions, Calvin Yeo, predicts that office rental growth will remain subdued for the rest of the year. He expects prime-grade office rents to remain stagnant in the next six months, with a potential growth rate of between 1% to 3% for the whole of 2024.