RESILIENT ECONOMIC CONDITIONS
Singapore’s economy expanded by 4.8% yoy in 2025, extending the 4.4% growth in 2024, supported by office-using sectors, finance & insurance, information & communications, and professional services, which collectively grew 4.1% in the year, after 5.2% in 2024. While GDP growth is expected to moderate to 1.0-3.0% in 2026 amid stronger tariff effects, lower interest rates, stabilising trade tensions, low unemployment and Singapore’s safe-haven status should underpin resilient office demand.
MOMEMTUM BUILDS ON LOW SUPPLY AND IMPROVING DEMAND
CBD Grade A office rents rose 0.7% qoq in Q4 2025, from 0.5% in Q3, as vacancies tightened to 4.4% from 4.7% amidst continued flight to quality. For full-year 2025, rents grew 2.4% yoy, outpacing 2024’s 1.7%, as the growing scarcity of CBD Grade A office spaces and lower interest rates encouraged more decisive occupier activity. CBD Grade A office net demand reached 0.7 msf in 2025, compared with 0.9 msf in 2024. This was largely due to the amount of new Grade A office supply, which came up to only 0.6 msf in 2025, against 1.3 msf in 2024. While net demand in 2025 was driven by continued leasing activities in new developments, including IOI central Boulevard Towers and Keppel South Central, vacancy rates also declined across other CBD Grade A office developments.
Decentralised all-grades office rents climbed 0.4% qoq in Q4, up from 0.1% in Q3, as vacancies fell to 4.7% from 5.3%. Full-year rents grew 1.3% yoy, below 2024’s 1.7%, as demand remained selective among cost-conscious occupiers.
RENTS POISED FOR UPSWING IN 2026
CBD Grade A office rental growth is expected to gain pace in 2026, as vacancy is projected to fall below 4.0%, backed by improving demand and constrained supply. Limited new supply will remain a key driver, with only 0.4 msf of CBD Grade A space completing in 2026 and 0.2 msf in 2027, well below the historical annual net demand of 0.9 msf. Market tightness is set to persist, though rent performance might vary across Grade A buildings by location and specifications.
Decentralised office rents are also expected to pick up in 2026. As CBD Grade A rents accelerate, decentralised locations, which offer a more cost-effective alternative, may attract renewed occupier interest, particularly from firms seeking value or larger floor plates.
