Prime office rents rise slower at 1.3% in H1, flat growth seen for H2

The occupancy rate in Raffles Place/Marina Bay hit 95% in Q2.

Rents of prime-grade offices in Singapore’s Raffles Place/Marina Bay precinct rose 1.3% in the first half of the year, slowing from the 2.5% increase a year ago amid rising vacancies.

Knight Frank data showed the average prime grade office rents in the precinct stood at $11.28 psf per month, up 0.7% QoQ, as the occupancy rate eased to 95% from 95.6% previously.

In the entire central business district, occupancy levels declined to 93.6% last quarter from 94.7% in the first quarter due to the longer lead time needed for decanted space to be absorbed.

Knight Frank said more firms in the financial and tech sectors are consolidating their workplaces, including China’s Tencent which recently announced relocation to CapitaSky from 30 Raffles Place.

“As more quality decanted space becomes available, landlords face pressure to moderate their rent expectations,” the property agency said.

Knight Frank expects rental growth to ease and flatten in the second half of the year on the back of tenants’ continued resistance to rent increases. 

“Landlords are increasingly willing to offer reasonable rents to keep buildings filled, especially with space consolidation and reduction by technology firms and banks,” it said. 

It projects prime-grade office rents to grow between 1% to 3% for the full year 2024.