CBD office rents inched up across the board amid continued tight supply (Image: Savills)
Grade A office rents in Singapore’s central business district rose for a seventh straight quarter in the final three months of 2025, as lower vacancy and a tight supply pipeline boosted landlord pricing power, according to Savills.
Average rents climbed 0.3 percent from third-quarter levels to S$9.96 ($7.75) per square foot per month in the fourth quarter, bringing full-year growth to 1.8 percent, up from 1.1 percent in 2024, the consultancy said in its Singapore Office Briefing. The vacancy rate eased to 6.7 percent, down 0.3 points from the previous quarter and 1.3 points from a year earlier.
Savills said demand remained concentrated in top-tier Grade AAA offices, with previously vacant and shadow space largely reabsorbed after the completion of IOI Central Boulevard Towers in 2024 and corporates adopting a “flight to quality” mindset.
“We experienced a somewhat strong finish to 2025 with leasing activity steadily increasing throughout the year,” said Ashley Swan, executive director of commercial and industrial at Savills Singapore. “There was a modest recovery in net demand in the last quarter as well as a reduction in shadow stock. These factors, working together, ensure the leasing market remained stable with rents inching up across the board.”
Tenant Demand Slows
Net demand for CBD Grade A offices remained positive for a fifth straight quarter but slowed, with net take-up falling to 88,000 square feet (8,175 square metres), according to the report. During the prior quarter, tenants had taken up 525,000 square feet more than they gave back.
Ashley Swan, executive director of commercial and industrial at Savills Singapore
Full-year net demand reached nearly 941,000 square feet — the strongest annual level since 2019 — supported by relocations into higher-quality buildings, Savills said.
Vacancy rates saw the sharpest declines in prime Marina Bay and Raffles Place, falling more than 1 point each to 8.4 percent and 4.2 percent, respectively. Other CBD precincts like Beach Road and Middle Road recorded modest increases.
Savills expects Grade A CBD rents to continue rising in 2026 and 2027, forecasting growth of 2 percent this year as new supply remains low.
“With vacancies in premium CBD buildings continuing to ease amid a limited pipeline of new Grade A supply, rents for Grade A offices should remain supported,” said Alan Cheong, executive director of research and consultancy at Savills Singapore. “Demand is expected to stay concentrated among larger and financially stronger occupiers, while non-Grade A buildings may face rising vacancy pressures over time as their tenant base, which typically consists of smaller companies, comes under greater margin stress.”
Capital Market Heats Up
Singapore’s office investment market is gathering pace as falling interest rates and rising rents whet investor appetite for trophy assets.
Malaysia’s Khazanah Nasional and Singapore’s Temasek put Marina One in Marina Bay up for sale last month, with the state-backed investors seeking up to S$6 billion ($4.8 billion) for the office and retail complex, according to market sources who spoke with Mingtiandi.
Marina One hit the market just over a month after Hongkong Land sold a one-third interest in Tower 3 of the Marina Bay Financial Centre for S$1.45 billion, marking the largest sale of an office asset in the city-state since BlackRock sold Tower 2 in the Asia Square complex to a CapitaLand REIT for S$2.1 billion in 2017.
Hongkong Land last week announced the launch of its inaugural private fund with assets under management of S$8.2 billion and backing from the Qatar Investment Authority and Dutch pension giant APG Asset Management. The vehicle is seeded with Hongkong Land’s one-third stakes in Marina Bay Financial Centre Towers 1 and 2 and One Raffles Quay, the developer’s 100 percent interest in One Raffles Link, and QIA’s 100 percent interest Asia Square Tower 1.
In another incubating deal, Robert Kuok’s Allgreen Properties is in exclusive due diligence to buy 78 Shenton Way in Tanjong Pagar from PGIM Real Estate for more than S$600 million ($468 million), Mingtiandi reported last month, with the closing expected in the coming weeks.
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