Prime grade office rents in Singapore’s Raffles Place-Marina Bay area experienced a modest uptick of 0.2% quarter-on-quarter in the second quarter of 2025, reaching an average of $11.38 per square foot per month. This slight increase reflects a cautious optimism in the market, contrasting with a more significant decline in rental growth seen in the previous year. The total rental growth for the first half of 2025 stood at just 0.2%, a noticeable drop from 1.3% in the same period of 2024, indicating a more tempered market response to economic conditions.
The core Central Business District (CBD) saw a decrease in Grade A office vacancy rates, which fell from 5.9% in the first quarter of 2025 to 5.3% in the second quarter. This decline suggests a tightening market for office space, as demand for premium properties continues to rise despite broader economic uncertainties.
The improved occupancy rates can be attributed to ongoing flight-to-quality trends, where businesses are increasingly prioritizing high-quality office spaces to attract and retain talent. This trend has been particularly pronounced as companies recognize the importance of providing a conducive work environment for employees, which has become even more critical in a post-pandemic world.
Leasing activity in the Raffles Place-Marina Bay area has seen a boost, driven by this flight-to-quality phenomenon. Businesses are willing to invest in premium office spaces, often opting for highly sought-after buildings that offer modern amenities and strategic locations.
This shift indicates a willingness among firms to commit to longer lease terms and invest in quality workspaces, even as economic conditions remain uncertain. As companies navigate through fluctuating market dynamics, the desire for quality space is increasingly influencing their decisions, leading to a more competitive landscape within the office rental market.
However, projections for future rental growth indicate a more cautious outlook for the latter half of 2025. Experts forecast flat rental growth, with annual expectations ranging between -1% and 2%. This tempered projection highlights the ongoing challenges faced by the market, including economic fluctuations and potential shifts in demand as businesses reassess their spatial needs in light of evolving work arrangements.
Despite these challenges, the recent trends in the Raffles Place-Marina Bay area demonstrate resilience within the office rental market. The decrease in vacancy rates, coupled with the modest increase in prime office rents, suggests that businesses are adapting to changing circumstances and continuing to prioritize high-quality office environments.
As the market moves forward, it remains to be seen how these trends will evolve in response to both internal and external economic factors, but the current uptick in rents and demand for premium spaces paints a cautiously optimistic picture for Singapore’s CBD office sector.
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News Source: Edgeprop
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