SINGAPORE (EDGEPROP) - Prime office rents in the Raffles Place and Marina Bay precinct went up to an average of $11.20 psf per month (pm) in 1Q2024, a 0.6% increase q-o-q, according to a report by Knight Frank Singapore released on March 25.

The rent growth was supported by renewals, keeping occupancy levels tight at 95.6% for the Raffles Place and Marina Bay precinct and 94.7% for the overall CBD. Calvin Yeo, managing director of occupier strategy and solutions at Knight Frank Singapore, adds that the renewals were done at slightly higher rents as companies opted to stay put instead of relocating or expanding to avoid capital expenditure.

Yeo notes that the demand for prime office spaces remains high because Singapore continues to appeal to multinational corporations. This is due to the wide pool of talent, tax incentives, a diversified economy and modern infrastructure.

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However, he believes office rents may flatten out in 2H2024 as tech firms and international banks lay off staff and consolidate business operations, which could lead to portions of office space being returned upon lease expiry.

A new supply of prime offices is also expected to be completed this year, increasing the existing supply. This includes IOI Central Boulevard Towers at 2 Central Boulevard, which is expected to bring in 1.26 million sq ft of office space, and 33-storey Keppel South Central along Hoe Chiang Road in Tanjong Pagar.

Meanwhile, Yeo anticipates that businesses should approach this year with "cautious optimism," given that geopolitical tensions pose a significant risk to business growth and operations. He also expects occupancy levels to remain tight at quality office buildings that can command a premium, backed by Singapore’s low unemployment rate and the city-state’s position as a premier business location. Knight Frank estimates rents to grow moderately between 1% and 3% in 2024.