What to take note in renting an office space in Singapore?

What to take note in renting an office space in Singapore?

URA display

Renting an office unit involves careful consideration of several key factors. Here are some points to note:

  1. Caution in the use of Office in an Industrial Space:
    • The Urban Redevelopment Authority (URA) mandates that at least 60% of the total floor area in an industrial development should be allocated for core industrial activities.
    • Ancillary activities, including offices, staff canteens, and showrooms, supporting the primary industrial functions, can collectively occupy up to 40% of the total floor area.
  2. Rental and Service Charge:
    • Rental rates are typically expressed as gross rent in Singapore dollars per square foot per calendar month (S$psf/mth), comprising Base Rent plus Service Charge.
    • Tenants are generally required to pay rent on a monthly basis, and this amount is subject to Goods and Services Tax (GST).
    • A Service Charge, usually ranging from S$1.00 to S$1.30 per sq ft per month, may be imposed to cover centralized air-conditioning during office hours, maintenance, security of common areas, and other building-related expenses. Adjustments may apply based on changes in maintenance costs.
  3. Lease Period:
    • The standard lease period is typically two to three years. However, negotiations for longer leases are possible for multiple floor tenancies or anchor tenants.
    • Leases extending beyond seven years are required to be registered with the Singapore Land Authority.
  4. Option to Renew:
    • The option to renew is generally for a period of two to three years and is typically subject to agreement on the rent or its review based on prevailing market rates.
    • Rental caps, though not commonly practiced in Singapore, may be agreed upon between the tenant and the landlord in the Lease Agreement.
  5. Fitting Out Period:
    • The fitting-out period is the duration between the Possession Date and the Lease Commencement Date, allowing tenants to renovate their new premises.
    • Depending on the size and prevailing market conditions, this period can vary from two weeks to three months. During this time, landlords often waive the payment of the Service Charge, although exceptions may exist.
  6. Security Deposit:
    • A security deposit, usually equivalent to three to six months of gross rent, is payable upon lease confirmation. This deposit is refundable (without interest) at the end of the lease.
    • The specific amount depends on the financial standing and paid-up capital registered under the Accounting and Corporate Regulatory Authority (ACRA).
  7. Letter of Intent (LOI):
    • The LOI is a non-legally binding document outlining the principal terms and conditions negotiated by both the tenant and the landlord.
    • The landlord responds to the submitted LOI and may propose counter-terms.
  8. Letter of Offer (LOO):
    • After mutual agreement on the main terms and conditions, the landlord issues the legally binding LOO and a copy of the Lease Agreement, detailing all terms and conditions.
    • Upon agreement on the details, the tenant signs the LOO and pays a booking fee equivalent to one month's rental (subject to prevailing GST).
  9. Lease Agreement:
    • The landlord's legal counsel presents the tenant with the Lease Agreement, outlining the terms and conditions agreed upon in the LOO

Office Space Market Singapore Third Quarter of 2023

Office Space Market Singapore Third Quarter of 2023

Commercial Office Market Singapore 3rd Quarter of 2023

Demand for Office Space Singapore

As of the third quarter of 2023, the demand for office spaces in the Central Business District (CBD) is mainly driven by financial and professional service sectors. These sectors, including finance, legal, and asset management, accounted for 58% of new leases, a significant increase from the 26% recorded for the entire year of 2022. Despite global economic uncertainties and geopolitical tensions, Singapore is seen as an attractive destination, especially for becoming a regional wealth hub. This attractiveness has led to increased demand for office spaces from businesses in asset management, financial services, and legal sectors. While the overall demand from the technology sector has slowed, there are still some tech companies looking to expand their presence in Singapore.

Interestingly, the vacancy rates in the central area dropped to 10.2% in Q3, the lowest in 2.5 years. This decline is attributed to a notable increase in net demand for CBD office spaces, reaching 398,264 square feet in Q3, the most substantial growth since Q1 2020.

However, it's observed that the high-interest rate environment might be causing institutional investors to hesitate from making significant purchases. During the quarter, there were no notable office transactions, as many investors are adopting a cautious "wait-and-see" approach until the market undergoes a repricing.

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Supply for Office Space Singapore

There's a limited amount of office space available in the Central Business District (CBD) until next year, and many businesses are choosing to renew their rental contracts because it's more cost-effective than moving to a new location.

For the high-quality Grade A offices in downtown and Orchard areas, the average rent per square foot per month increased from S$11.44 in Q2 to S$12.31 in Q3. These are usually modern or recently renovated offices with larger spaces that command higher rents.

For other office spaces in Singapore (Category 2), the average rent slightly decreased from S$6.25 per square foot per month in Q2 to S$6.24 in Q3, according to the Urban Redevelopment Authority (URA).

By the end of Q3, the total office space available across the island was about 1,097,000 square meters, higher than the 927,000 square meters at the end of Q2. More office space is expected to be available in 2024 with the completion of IOI Central Boulevard Towers and Keppel South Central, adding around 1.9 million square feet of new office space to the CBD. This could lead to increased competition among businesses for office rentals.

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Office Space Rental Situation

The cost of renting office spaces in the central part of Singapore continued to increase in the third quarter of 2023. According to data from the Urban Redevelopment Authority (URA), the available office space decreased by 42,000 square meters, contributing to a 4.9% rise in office rents during Q3. This increase was higher than the previous quarter's 2.3%.

The demand for Grade A offices, which are high-quality and often more modern, might be a key factor in this rent rise. Landlords are maintaining their rental prices due to low vacancy rates and increasing operating costs.

Interestingly, despite economic uncertainties, office rents have remained robust, showing a 12.8% increase in the first nine months of 2023.

Looking ahead, Grade A office rents are expected to grow by 1.5% to 2% for the entire year, surpassing the predicted economic growth but at a slower pace compared to the significant 8.3% rental growth observed in 2022.

Food Factory Regulations Singapore

Food Factory Regulations Singapore
Regulated by Singapore Food Agency

Ensuring Food Safety and Fit for Consumption

Food Factory Regulations Singapore

Singapore Food Agency (SFA) which is a government statutory board, licenses all establishments in food processing foundations where food is fabricated or manufactured, prepared and packing with the objective of distribution to wholesalers and retailers. Some of the food processing such as pastry or bakery and flour candy confectionery industrial facilities, dairy preparing plants, noodles and pasta makers, surimi-based items production lines and, and so on.  Licenses issued by SFA also apply to butcher or slaughter houses and cold stores that are utilised for storage of meat or fishery items. Retailing of food such as for restaurants, kiosks, cafe, groceries, food wagon and catering are licensed by the National Environment Agency (NEA).

All food companies authorised by SFA are subjected to customary assessments to guarantee safe food and fit for consumption.  Laboratory analysis could be conducted to check for consistence with the Food Regulations.

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There are 4 types of grading done by the AVA on food establishments; "A", "B", "C" or “D”.  This is based on food safety and cleanliness guidelines done yearly.  The aim is to allow food companies to continuously upgrade, to be competitive and produce safe and wholesome food.  Consumers can be assured of the high standards when they purchase the food.  A list of food establishments with their respective grades can be found at AVA website.

Inspection and Sampling

Regular inspections are done for all food processing establishments, cold room storage and slaughter houses.  Frequency of the inspections are dependent on the grade and compliance history of the establishments.  Usually done unannounced to get a more accurate assessments.

All food companies authorised by AVA are subjected to customary assessments to guarantee safe food and fit for consumption.  Laboratory analysis could be conducted to check for consistence with the Food Regulations.

Food Storage Warehouse

Legal Power

SFA is able to take legal action against any licensee who is found in rupture of licensing conditions or contravene any provision of the  Wholesome Meat and Fish Act and the Sale of Food Act.  SFA may suspend or repudiate the permit that was issued to the licensee until they are satisfied that with the rectification implementation.


Licensing and Registration

There are limited establishments that were licensed to handle food by SFA.  There were 1,623 licences for food processing establishments, 407 central kitchen and 15 slaughter houses in 2022.    The number of food retail establishments was 50,828, out of which there were 407 central kitchens.  SFA plays a critical and strict role in assuring food security and food safety in Singapore.

Reference: Singapore Food Agency Annual Corporate Report 2022/2023

Food Factory For Sale

There is a great opportunity to own a Freehold Food Factory - CT FoodNex at Mandai Estate.  Designed to handle food in almost all aspect, it is a ramp up 20 footer truck food factory that users can load and unload their goods at the door step. Completion of this is estimated to be in 2027.

  • CT FoodNex, a brand new Freehold Ramp Up Food Factory at Mandai Estate is newly launched and more than 65% has been sold
  • Located in Mandai Food Zone, in one of the sought-after addresses in food zone area of District 25.
  • It is a 10-storey Multi-User B2 Industrial Food Factory with a Canteen on the ground level
  • This commercial food factory has 110 spacious units and each unit is equipped with its own exhaust and refuse chute.

More details at www.CosySingapore.com/ct-foodnex

Please contact us if you have interest in this.

How to assess the best commercial property for rent?

How to assess the best commercial property for rent in Singapore?

Assessing a good commercial unit for rent involves considering several factors to ensure it aligns with your business needs and goals. Here are some key aspects to consider when evaluating a commercial unit for rent:



Choose a location that is easily accessible for customers, suppliers, and employees. Consider factors such as proximity to transportation routes, target market, competition, and overall visibility.

In Singapore, the major business nodes are at the Central Business District, Tampines Regional Centre, Woodlands Regional Centre, and Jurong Lake District. Industrial estates and business parks are located at various areas, including One North, International Business Park, Punggol Digital District, Jurong Industrial Estate, and more.

Rental rates at premium locations in the Core Central Region or nearer to the Core City are generally higher than those at industrial parks and business parks.


Size and Layout:

Evaluate the size and layout of the unit to ensure it can accommodate your business operations effectively. Consider factors such as floor area, ceiling height, storage space, and any specific requirements for your industry or business type. Utilize space planning guides, such as those offered by CosySingapore, to estimate the right size for different areas within your organization.


Foot Traffic and Target Market:

Assess the potential foot traffic in the area and whether it aligns with your target market. Consider the surrounding businesses, nearby amenities, and any local attractions that may attract potential customers. Access to ample parking facilities or proximity to MRT stations can also be important considerations.

Infrastructure and Utilities:

Assess the potential foot traffic in the area and whether it aligns with your target market. Consider the surrounding businesses, nearby amenities, and any local attractions that may attract potential customers. Access to ample parking facilities or proximity to MRT stations can also be important considerations.

Evaluate the availability and quality of essential infrastructure and utilities, including electricity, water supply, HVAC systems, internet connectivity, and telecommunications infrastructure.

Condition and Maintenance:

Inspect the condition of the commercial unit, both interior and exterior, for signs of wear and tear, structural issues, or maintenance requirements. A well-maintained unit will create a positive impression and save you from potential future costs.

Lease Terms and Flexibility:

Review the lease agreement carefully, considering rental price, lease duration, renewal options, and additional costs or fees. Ensure that the lease terms are favorable and flexible enough to accommodate your business's growth or changes in the future.


Parking and Accessibility:

Assess the availability of parking facilities for customers and employees, as well as the overall accessibility of the unit. Consider public transportation options, nearby parking lots, and compliance with accessibility standards.

Safety and Security:

Evaluate the safety and security measures in place, including surveillance systems, alarm systems, fire safety equipment, and emergency exits. Ensuring the safety of your employees, customers, and assets is crucial.


Zoning and Legal Compliance:

Verify that the commercial unit is zoned for your specific type of business or activities and complies with all applicable regulations, permits, licenses, and building codes.

Cost and Financial Viability:

Consider the rental cost in relation to your budget and projected revenue. Assess the overall financial viability of the unit, including potential return on investment, operating expenses, and any additional costs associated with the unit.

It is recommended to visit the commercial unit in person, thoroughly inspect the space, and ask relevant questions to the landlord or property manager. Additionally, consider seeking professional advice from a real estate agent or lawyer to ensure a comprehensive evaluation and understanding of the terms and conditions before making a final decision.


At CosySingapore.com, we provide a detailed checklist for each of our tenant clients. A checklist can serve as a helpful tool to ensure that all necessary considerations and requirements are addressed before signing a lease agreement. It promotes a structured and systematic approach to evaluating, selecting, and securing the right commercial space that aligns with the tenant's needs, priorities, and legal obligations.

Additionally, there are listings available for various types of properties for rent, including

B1 Industrial Units,

B2 Industrial Units and

Office Space

Singapore’s ’30 by 30’ Food Security Goal

Aiming to enchance Food Security and Sustainablity

Singapore 30 by 30 food security goal

Issue: More than 90% of food is currently imported.

In Asia, there is rapid food demand growth with meat and seafood consumption projected to increase by 33% by 2030. There is falling yield growth, and yields of corn and soybean are more than 50% below the United States. There is also limited access to arable land and limited related issues.

Singapore’s reliance on imports for 90% of its food puts it at the mercy of external forces in exporting countries, the majority of which are beyond the Republic's control. According to Singapore Food Agency (SFA), Singapore imports food from some 170 countries.

Moreover, the supply is not consistent due to climate change, extreme weather incidents, loss of land to produce food and outbreaks in diseases of animal stock and plants. This has resulted in many countries prioritising feeding their own population.

An Economist Intelligence Unit report assesses Singapore to rank first on the food security index. However, when considering climate-related and natural resource risk factors, Singapore falls to 12th place.

There has to be a change. Home-based producers now meet less than 10% of Singapore's nutritional needs.

Singapore 30 by 30 food security strategies

Solution: To Transform Singapore’s Agri-food Industry

Announced in 2019, SFA has set a goal for locally produced food to meet 30% of Singapore's nutritional needs by 2030, reducing the country's reliance on imports and its vulnerability to supply interruptions. One that is productive, innovative and sustainable.

Therefore, the Government came up with four strategies to tackle this:

  1. Develop food-related spaces and infrastructure such as the Agri-Food Innovation Park (AFIP) which will help by colocating urban agriculture, aquaculture and novel food activities. Exploiting alternative spaces such as vacant state buildings, rooftops and the deep sea
  2. Harness innovation and research. Tapping on technology, expanding agri-food production and automating systems via robotics and sensors. Funding of up to S$144 million was committed to the Singapore Food Story R&D Programme.
  3. Grow the industry and ecosystem. Grooming experts in the field with Singaporean talent in urban food production processes and business models. For example, Republic Polytechnic offers a part-time diploma course in urban agricultural technology, covering technologies for food production, farming processes and management.
  4. Engage the public. Encouraging consumers in choosing homegrown produce with initiatives with SG framers' markets and supermarkets. An initiative by SFA is coming up with a new brand logo to make local produce easier to be identified. Raising awareness on food security.

There is this Business Opportunity with major opportunities in scaling up existing production and producing future foods.

To increase productivity, the production of vegetables, fish, eggs and other primary produce is geared up to be high-tech. Challenges that need to be faced are limited land allocated for farming, high production costs, low consumer awareness, and resistance to purchasing pricier local produce. The government is exploring partnership opportunities such as using commercial spaces for urban farming and master planning in new infrastructure in the Agri-Food Innovation Park.

There are also opportunities in food research such as for novel foods, alternative proteins and focusing on nutrient-dense food.

Singapore's ’30 by 30’ goal will not only enhance Singapore’s food security but also in regional collaboration for a rapidly urbanising Asia.


Piet Mondrian Abstract Art

One School Impressionist Art - Piet Mondrian (Inspiration for Facade Design of CT Foodnex)

CT Foodnex Piet Mondrian Famous Art Pieces

The 19th-century painting movement known as Impressionism was started by a group of French artists who were centered in Paris. Their artwork rose to fame starting in the 1870s.
Claude Monet, Camille Pissarro, and Auguste Renoir are the prominent artists.

Dutch painter Piet Mondrian rose to prominence in the 20th century for his abstract works.
He used primary-colored planes and intersecting lines at right angles to create his well-known artwork.

With his early works, Piet Mondrian demonstrated an interest in impressionist methods and this style of art.
Under the influence of pointillism and Fauvism, Mondrian employs vivid, clean colors and expressive brushwork, much like Van Gogh.

De Stijil Art Movement

What makes Mondrian so renowned?

The De Stijl movement, which limited form to its most fundamental components and eschewed visually perceived reality as subject matter, was cofounded in 1917 by Piet Mondrian.
This standard is reflected in works like Composition with Red, Blue, and Yellow (ca. 1930).

What does Mondrian's art mean?

The dynamic, evolutionary forces that shape nature and the human experience, according to Mondrian, may be represented by his abstraction in a way that can be understood by everyone.

In fact, he thought that abstraction offers a more accurate representation of reality than illusionistic pictures of things in the physical world.

CT Foodnex Piet Mondrian Inspired

What made Piet Mondrian's work distinctive?

Piet Mondrian was a significant non-representational painter whose work developed over his lifetime into his own distinctive style, which he called "neo-plasticism."

This work was Mondrian's representation of his profoundly held philosophical convictions rather than drawing on outside artistic inspirations or conventional approaches.

What are the prices of Mondrian's works?

The realized prices for Piet Mondrian's works have ranged from 25 USD to 51,000,000 USD depending on the size and medium of the piece of art.

Since 1998, Composition No. II, which was auctioned at Sotheby's New York in 2022, was sold for the artist's highest ever auction price of 51,000,000 USD.

Sungei Kadut Transformation To Eco-District

Sungei Kadut Transformation Into An Exciting Eco-District Singapore

Commercial Industry Players

Sungei Kadut is one of Singapore’s oldest industrial estate that is overdue for a makeover. A multimillion-dollar facelift is planned to transform Sungei Kadut into an exciting high tech Eco-district, to keep up with the times.

Covering over 700 football fields, it will include new growth industries, such as agri-tech and environment tech. It will primarily has four zones:

Sungei Kadut Precints

Sungei Kadut Central:

  • A hub for light industries, such as furniture and lifestyle eco-system
  • High rise developments with shared facilities
  • Dining, leisure and recreational amenities
  • Sungei Kadut MRT Station which will be an interchange

Sungei Kadut North:

  • Recycling Facilities
  • Construction and Timber Industries
  • Waste management Companies

Sungei Kadut South:

  • New ways of co-living and co-working
  • Residential and business community
  • Park connectors
  • Biodiversity trails

Agri-food Innovation Park (AFIP):

  • Food related R&D Facilities
  • High Tech Farms
  • Indoor Farming
  • Agricultural hatcheries
  • Farm to Fork restaurants
  • Farmers’ Market
High Tech Farming Area

For the future, Sungei Kadut will be a place for residents and the public to relax, with farmers’ markets and farm-to-fork restaurants.


Trendspace will be for furniture and related industries, whereas TimMac will be for timber, metal and machinery industries. There is also Kranji Green at Sungei Kadut North which will accommodate waste management and recycling firms.

Possibly Sungei Kadut MRT Station

Agri-Food Innovation Park (AFIP)

Agri-Food Innovation Park with a large size of around 18 hectare will be home to companies and research and development centres catering to high tech production segments including indoor farming, aquaculture hatcheries and alternative protein manufacturers. This will bring us to one step closer to Singapore’s goal of producing 30% of its nutritional needs by 2030, a crucial initiative for future stability.

This will attract high value, knowledge-based jobs such as systems engineers, plant scientists and aquaculture nutritionists. The objective is making Singapore to be a leading urban agriculture and aquaculture technology hub. This will also help to improve the productivity of the local farms and strengthen Singapore food security.


Sungei Kadut MRT Station

The Sungei Kadut MRT Station will be a planned station in between the Kranji and Yew Tee MRT Stations. Come mid-2030s, this will be an interchange with 2 major MRT lines; the North South Line (NSL) and Downtown Line (DTL) via a connection from Bukit Panjang MRT Station.

Sungei Kadut station will serve residents in nearby towns, such as Yew Tee and Choa Chu Kang. It will also benefit those working at the up and coming industrial developments in Sungei Kadut.

Another significant note is that the North South Line will connect to Woodlands, within 3 stops. This will give business in this area more business advantages in terms of manpower access and logistics.

Expansion of Food Factories and Facilities at Mandai

Mandai is strategically transforming to a major Food Processing Business District in Singapore, keeping close to Sungei Kadut Eco District. There is much potential for food production synergy.

There are a number of established food factories and facilities already established at Mandai. More areas, especially those with under-utilised plot ratio, may be developed into food factories.

In 4th quarter 2022 and 1st quarter 2023, there will be two freehold food factories to be launched. Each cater to different segment of the markets. One of them essentially caters to small production units and the other cater to mid to large production units.

If you are keen to know about one which allow 40 footer access at the ground floor and 20 footer access at level 2 to level 2, this would be CT Foodnex.

Contact us and we will be able to guide you though these two freehold food factories.


URA bars strata subdivision for commerical properties in Central Area

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URA bars strata subdivision for commerical properties in Central Area

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Latest on Commercial Property at Raffles Place

URA Circular, dated 15 March 2022 indicated:

Restrictions On The Strata Subdivision of Commercial Properties


With the latest move by URA (dated 15 March 2022) to bar strata subdivision for commercial properties in the Core City, existing strata office units will become more valuable due to the dearth of supply in the future.


Commercial Property Research – Industrial Property 4th Quarter 2021

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Commercial Property Research - Industrial Property Singapore 4th Quarter 2021


Despite the slight slowdown in Q4 2021, the industrial property market has had an exceptional year in terms of price growth and leasing activity, against the backdrop of the recovering economy.

Based on advance estimates, the Singapore economy grew for the fourth straight quarter, rising by 5.9% YOY in Q4 2021. In 2021, Singapore’s GDP grew by 7.2%, according to the Ministry of Trade and Industry (MTI). The manufacturing sector led the growth in Q4 2021, expanding by 14% YOY. Growth during the quarter was supported by output expansions in all clusters.

In addition, the recent strong non-oil domestic exports (NODX) performance and continued expansion Singapore’s manufacturing Purchasing Managers’ Index (PMI) suggest that the manufacturing and export environment had been key pillars of growth in Q4 2021.

Singapore’s economy is projected to grow by 3% to 5% in 2022. Downside risks to watch will include global monetary policy tightening, potential emergence of new virus variants and China’s economic slowdown.

JTC noted that any rise in occupancy rates of industrial spaces are likely to be moderated by new completions in 2022, although some delays are still expected in completions.


Rents and Occupancies

  • • Occupancies for overall industrial properties remained stable in Q4 2021 amidst tight supply and resilient demand.
  • • Data from JTC showed that the overall occupancy rate stood at 90.1% in Q4 2021 unchanged from the previous quarter. When compared against Q4 2020, occupancies were up by 0.2 percentage-points (ppt) in Q4 2021.
  • • The stable occupancies were likely due to the persistent delays in new completions, as worksite activity continued to be weighed down by labour constraints, due to border restrictions on the entry of migrant workers. While construction has picked up since 2H 2021, completions are slow – only about 11,000 sqm of industrial space was added to the available stock in Q4 2021, compared to the increase of 228,000 sqm in Q3 2021.
  • • Despite overall occupancies being flat, some industrial property segments posted a QOQ decline: Warehouses (-0.1 ppt QOQ); and Single User Factory space (-0.1 ppt QOQ).
  • Business park spaces saw improved occupancies in Q4 2021, growing by 0.2% ppt QOQ, whereas the Multiple-User Factory segment saw a 0.4% ppt QOQ growth in the occupancy rate.
  • JTC noted that overall rentals rose by 0.2% QOQ in Q4 2021, with all segments, except Business Parks, posting growth over the previous quarter. On a year-on-year basis, overall rents are up by 2% in Q4 2021.

Industrial Property Leasing Activity

  • While leasing demand softened slightly in Q4 2021 owing to the year-end seasonal lull, industrial leasing activity for the whole of 2021 hit new highs due to the recovering economy and expanding output across all sectors.
  • In Q4 2021, there were 3,130 tenancies – representing a 10.6% decrease from 3,501 contracts in the previous quarter. For 2021, a record 13,081 tenancies were inked.
  • Total rent value grew slightly in Q4 2021, growing by 1.1% QOQ to $22.3 million from about $22.05 million in Q3 2021. For the full year, total leasing value amounted to $87.4 million, surpassing the recent peak in 2019 which recorded a rental value of $84.2 million.

Commercial Property Research – Office Property 4th Quarter 2021

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Commercial Property Research - Office Property 4th Quarter 2021


In Q4 2021, Singapore’s economy continued to grow strongly amid improving global and trade outlook. Based on advance GDP estimates, the Singapore economy grew strongly by 5.9% YOY and 2.6% QOQ in Q4 2021. Based on these estimates, the economy has grown by 7.2% for the full year, according to the Ministry of Trade and Industry (MTI). The economy is projected to grow by 3% to 5% in 2022.

The office property market ended the year on a strong note with several big-ticket deals inked during the quarter. Market observations suggest that demand for office space is expected to remain buoyant with a number of businesses looking to expand against a backdrop of the global economic recovery and limited availability of prime office space.

Rentals are expected to grow at a faster pace in 2022, which could further pique the interest of investors in Singapore's prime office assets and drive capital value. The economic expansion along with Singapore’s commitment towards the reopening of its economy and its borders, will boost the office market’s investment and occupier demand in 2022.

Sales Transactions and Prices

  • According to the URA office price index, the prices of office space contracted by 1.8% QOQ in Q4 2021, continuing the downward trend from the 2.4% contraction in Q3 2021 – the slip in prices was largely attributed to the Central Area office prices which contracted by 2.7% QOQ. For the whole year, office prices have contracted by 5.8%.
  • Based on caveats lodged, the total value of transactions in Q4 2021 surged to $2.03 billion, up sharply from $241.9 million in Q3 2021. This took 2021 sales to $4.79 billion, which does not capture deals for which caveats were not lodged. The total value of deals transacted in 2021 has surpassed the last peak in 2012, where values hit $3.7 billion.
  • In Q4 2021, there were 98 sales transactions, reflecting a 30.6% QOQ increase from the 75 deals done in Q3 2021. For the whole year, there were 346 office sales – the highest since 2014.
  • The highlight of Q4’s office transactions was the divestment of the 23-storey Grade A office building on One George Street by OGS LLP – a limited liability partnership, of which CapitaLand Commercial Trust (CCT) owned 50 per cent of – to SG OGS, a private firm, in mid-November for $1.28 billion. Just a month later, the building was then acquired from SG OGS by a joint venture between JPMorgan Global Alternatives and Nuveen Real Estate for $1.29 billion. A caveat has yet to be lodged for the second deal, and should it be included – it brings the total value of office investment deals in Q4 to more than $3.3 billion.
  • Based on caveats, the next biggest office deal of Q4 was the sale of 112 Robinson, a 14-storey freehold commercial building on 112 Robinson Road for $269.7 million. The purchase price works out to $2,925 per square foot based on a net lettable area (NLA) of 92,205 sq ft. The buyer is Alpha Eins (SG) Pte Ltd, an entity of Munich-based family office AM Alpha. The 112 Robinson deal is believed to be the family office’s first direct real estate acquisition in Singapore.

Rentals and Leasing Trends

  • Despite activities in the year-end being typically slower, due to the seasonal lull, the leasing market in Q4 2021 fared relatively well compared to the same period in the last couple of years.
  • The URA office rental index showed that rents inched up by 0.9% in Q4 2021, reversing from the 3.5% decline in Q3 2021. For the whole of 2021, office rentals have grown by 1.9%
  • According to Realis data, the number of office rental transactions rose by 6.2% QOQ to 1,385 contracts in Q4 2021. On a YOY basis, the number of rental contracts was up by 7.9%.
  • Total rental value contracted slightly by 0.7% QOQ to $27.0 million in Q4 2021. However, on a YOY basis, overall leasing value grew by 26.6% from $21.3 million in Q4 2020.
  • 2021 was the year of “flight-to-quality” where a number of occupiers seized the chance to relocate to a better location or space with better specifications. Many occupiers also conducted space-rationalisation reviews in view of more workers telecommuting.• Rentals have recovered strongly on the back of the economic recovery and Singapore’s steady roll out of the vaccination programme – both of which has helped to boost the confidence among businesses and office occupiers. Delays in office supply completions due to construction disruptions has kept office supply fairly tight and rentals firm.
  • For 2022, demand for office space will likely be primarily led by tech and finance institutions as well as corporates that are increasing headcounts for business expansion, as the global economy return to normalcy. As of January 2022, 50% of the workforce are allowed to return to their workplace, bring more buzz to the office districts.
  • Some leasing trends that may gain traction in 2022 include co-working, offices that allow flexible space configurations as well as offices with green features and high-quality air filtration systems.

Office Vacancies

  • Latest URA data showed that the island-wide vacancy rate of office space has decreased slightly. Vacancies dipped to 12.8% as of Q4 2021 from 12.9% in the previous quarter.
  • Vacant Private Sector Office Space island-wide declined to 952,000 sqm (nett) as at Q4 2021, down from 967,000 sqm in Q3 2021. The bulk of vacant space in Q4 was located in the Downtown Core at 533,000 sq m.
  • According to the URA, the amount of occupied office space fell by 10,000 sqm (nett) in Q4 2021, following the decrease of 5,000 sqm (nett) in Q3 2021. Meanwhile, the stock of office space decreased by 23,000 sqm (nett) in Q4 2021.
  • In terms of supply in the pipeline, there was a total of 786,000 sqm gross floor area (GFA) of supply as at end of Q4 2021, compared with the 755,000 sqm GFA of space in Q3 2021.
  • In 2022, the limited incoming office supply – estimated at 78,000 sqm - should help to support occupancies in the near-term. At the same time, there may be an uptick in leasing demand from occupiers that have been displaced from buildings that are slated for redevelopment, such as AXA Tower and Fuji Xerox Towers.

Market Outlook

Looking ahead, office prices and rentals are expected to continue to recover in 2022, in light of limited Grade A new office supply and the positive economic outlook.

While the prospects in the office property market are generally looking up, there are some downside risks including the impending interest rate hikes and rising inflation, potential emergence of new virus variants, supply chain disruptions as well as China’s economic slowdown.

Growth in the office market may also be uneven, with investors and occupiers being more selective; prime office assets that have higher specifications and located in choice locations may be more sought after, compared to Grade B office spaces or buildings outside the downtown core.