_Office Market Update Q4 2023
December 26, 2023
Highlights
- Prime Grade office rents in the Raffles Place/Marina Bay precinct increased 0.7% q-o-q in Q4 2023, to average S$11.13 psf pm, extending from the 0.8% q-o-q growth registered in the previous quarter. On a full-year basis, rents rose by 4.1%, slowing from the 5.5% growth recorded a year ago. Overall, office rents grew steadily in the first half of the year but eased in the second half as firms prioritised business continuity and operational stability amid the challenging business climate.
- In Q4 2023, businesses located in the downtown core that announced expansion or relocation plans were few and far between. However, some activity was observed in the city fringe. Citibank Singapore planned to establish two more wealth hubs in Singapore. One will be located on the top floor of Parkway Parade office tower, thereby increasing the bank’s current office footprint in the building by another 60%. Another wealth hub will be situated in the new One Holland Village integrated development which is approximately 80% larger than the bank’s previous outlet in the area.
- According to the Ministry of Trade and Industry (MTI), Singapore’s Gross Domestic Product (GDP) growth is expected at around 1% in 2023 due to the slower growth recorded in the first two quarters of the year. MTI also projects Singapore’s GDP performance to range between 1% and 3% in 2024, with the return of global demand for electronics as well as the expected moderation of interest rates.
- Even though 2024 is expected to be better, cautious optimism hangs in the balance with continued geo-political tensions and the risk of an escalation of military conflict in the Middle East. On the home front, the office market has been fairly subdued in the later half of 2023 with this trend expected to continue into early 2024. Most office occupiers are likely to remain cautious in expanding amid the continued clouded outlook until such time when more certainty prevails.
Read the full report here.