New office space supply will wane until 2020.
Knight Frank said that Singapore's prime office rents are projected to rise by at least 8% to 12% YoY by the fourth quarter of 2018.
According to its office market snapshot, the "flight to quality and efficiency" supply-led demand for prime office space is expected to continue in 2018.
"Tenants are relocating to larger and more efficient floor plates to fulfil their evolving operational requirements, over less and/or scalable office space through various activity-based workplace solutions," said Knight Frank office advisory executive director & head Calvin Yeo.
Moreover, Singapore's improved economic prospects could also support the increase in prices. KF noted the government and private sector's initiatives to drive growth in the new economy can increase demand for office space.
KF cited fintech hub Lattice80, which has recently announced plans to conduct an initial coin offering (ICO) in 2018, which may catalyse a new segment of office space demand not seen in 2017.
Industries such as professional services are expected to lead the demand.
Moreover, with lack of building completions, new office space supply will wane until 2020, and prime grade office rents are expected to rise in the near term.
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