Singapore's Office Market Demonstrates Continued Resilience

Singapore, 1 July 2025 – The Singapore office market again demonstrated resilience in Q2 2025, recording the second consecutive quarter of rental growth even in the face of global economic uncertainties and geopolitical tensions. According to CBRE Research, gross effective rents for Core CBD (Grade A) offices rose by 0.4% quarter-on-quarter to $12.10 psf/month.

Tricia Song, CBRE Head of Research, Southeast Asia, observed, “The ongoing flight to quality continued to shape leasing activity, with occupiers gravitating toward premium office spaces during relocations. Vacancy rates in the Core CBD (Grade A) declined from 5.9% in Q1 2025 to 5.3% in Q2 2025 as a result. Notably, the IOI Central Boulevard Towers continued to absorb the market overhang from last year, reaching an occupancy rate of approximately 85% by Q2 2025.”

David McKellar, CBRE Head of Office Services, Singapore, shared, “In Q2 2025, the Core CBD attracted a diverse mix of tenants, including firms from the insurance, asset management, hedge and quant fund, and pharmaceutical sectors. Coveted large contiguous spaces exceeding 30,000 sq. ft. remain scarce, with limited options available. Prime office spaces in the secondary market, particularly those in central locations, have also been swiftly taken up. With IOI Central Boulevard Towers being the last major completion in the Core CBD (Grade A) market until 2028, we expect further tightening of supply in the coming quarters and years.”

“While the broader economic slowdown could weigh on business sentiment, we have observed that the limited supply of quality space has prompted some occupiers to accelerate decision-making in order to secure desirable units while they are still available. Singapore’s reputation and long-term prospects as a key and stable business hub has also instilled confidence among occupiers to decisively commit to leases”, Mr McKellar added.

CBRE notes that this confidence extends beyond the CBD market. In the decentralised office market, rentals have remained stable despite a rise in vacancy rates from 6.2% in Q1 to over 7% in Q2 2025. This increase was largely contributed by new supply in the form of completions in decentralised locations such as Labrador Tower and Paya Lebar Green, which are subject to significant leasing activity and are expected to be progressively committed in the coming quarters. For instance, advanced negotiations are underway for the remaining space at Paya Lebar Green. Outside of these projects, prime Grade A spaces in decentralised areas continue to see positive renewals, attracting tenants from the manufacturing and transport sectors.

In the office investment market, Q2 2025 office transactions saw a 35.3% q-o-q slowdown to $207.07 million, with the largest transaction during the quarter involving Levels 8, 11, and 12 on 108 Robinson Road for $55.76 million ($3,912 psf). All deals in the quarter were of strata office units or floors, which continued to see keen interest from investors. Excluding the partial stake sale in Woods Square in Q1 2025, strata office transactions rose 6.1% q-o-q from $195.22 million across six transactions in Q1 2025.

Michael Tay, CBRE Singapore Advisory Deputy Managing Director and Head of Capital Markets said, “In this uncertain environment globally, Singapore’s status as a safe haven is attracting great interest from investors – both local and overseas. With the 3M compounded SORA falling by almost 1 percentage point to 2.1% since the start of the year, and the resilient fundamentals of the office market, we are now seeing more interest and enquiries for prime office buildings. Buying demand should remain steady in the foreseeable future, and we expect to see competitive interest for choice assets when they are made available.”

Forecast

The Draft Master Plan 2025 released on 25 June highlighted the continued rejuvenation of the city centre into more vibrant live-work-play precincts with the extension and expansion of the CBD Incentive Scheme and Strategic Development Scheme announced earlier. After bumper completions in 2024, new office supply in 2025-2029 will come mostly from redevelopments, and is below historical average.

For the first half of 2025, Core CBD (Grade A) prime rents have increased by 1.3%. Despite initial concerns over global headwinds, the reduced new supply is expected to support office market fundamentals through 2025 and beyond. CBRE Research upgrades its rental forecast, and rental growth for 2025 is projected to reach the upper end of the 2–3% range, with upside potential in the near term.