_Office Market Update Q3 2022

Key Highlights

• Prime Grade office rents in the Raffles Place / Marina Bay precinct increased 1.4% q-o-q in Q3 2022, averaging S$10.51 psf pm, with rental growth rising by a cumulative 5.3% y-o-y since rents bottomed out in Q3 2021.
• Due to the non-excessive supply of new office inventory coupled with increasing demand for prime space, market balance shifted to landlords providing support for the higher rents this quarter. 
• Business service firms in the Asia-Pacific (APAC) region are increasingly relocating their headquarters to Singapore due to geopolitical tensions. With Singapore identified as a key business node by many multinational companies (MNCs) in a continued “flight to safety”, demand for office space was healthy as corporates sought the stability of the city-state for business continuity.
• Technology start-ups from South-East Asian countries such as Indonesia, private equity companies and family offices (FOs) have also been on the increase in Singapore, attracted by the established sophisticated financial infrastructure and political stability.
• Total employment reached 99.5% of pre-pandemic levels in Q2 2022 with retrenchments at a record low, and further expansions in business headcounts expected.
• Although global inflation, supply chain and material disruptions, and geo-political unrest are combining to push global economies into a slowdown, Singapore remains poised as a shelter for multi-national firms to weather the coming economic challenges.
• With occupancies steadily tightening and leasing activity to remain firm for the rest of 2022, Knight Frank maintains its forecast of 3% to 5% growth in rents for the whole of the year with the sector increasingly becoming a landlord’s market going into 2023.