Singapore has maintained its ranking as the seventh most expensive city for office space as of 2Q2024, according to Savills (Picture: Samuel Isaac Chua/The Edge Singapore)
Singapore has maintained its ranking as the seventh most expensive city for office space as of 2Q2024, according to research by Savills. In its latest Prime Office Costs report, the consultancy notes that annual net effective occupier costs (which includes rent and fit-out costs) for prime Singapore offices stood at US$146.07 psf ($193 psf) last quarter, expanding 0.3% compared to 1Q2024.
London took the top spot with an annual net effective occupier cost of US$283.57 psf (up 4.2% q-o-q), followed by Hong Kong at US$230.93 psf (down 1% q-o-q) and New York Midtown at US$202.72 (up 3.7% q-o-q).
The report also found that rents of prime office space in Singapore bore a 21% premium over broader Grade-A office stock. The report defines prime offices as those within the top tier of Grade-A office spaces, typically commanding the highest 5% to 10% of rents in the market.
Read also: Office rents and prices recover 3.1% q-o-q in 2Q2024 as pipeline supply drop
Globally, prime offices in North America logged the highest premium above wider Grade-A stock in 2Q2024 at 62.5%. In Asia Pacific, the premium stood at 33.7%, supported by low differentials in markets such Sydney, Seoul and Singapore. “In these markets, offices in high-quality downtown buildings are already comparatively higher cost, and prime stock may not differentiate itself enough through sufficient amenities or prestige to warrant high premiums,” the report states.
The Europe, Middle East and Africa region registered a low premium of 17.9%, which Savills attributes to growing rents across the broader Grade-A markets. In contrast, price premiums in some Chinese markets exceeded 70%, underpinned by steady demand for top-tier office space.
Savills believes a continued flight to quality will continue pushing tenants to prime offices for the rest of the year, despite increased fit-out costs and macroeconomic uncertainty. “Gross rental rates are starting to ease from historic highs in some markets, but demand remains strong for the top-end prime office product, and this will underpin prime rents going forward,” the report adds.