ECONOMIC OUTLOOK SOFTENS
Singapore’s 2025 GDP forecast has been downgraded to 0-2% from 1-3%, as its open, trade-reliant economy is impacted by slowing global trade amid US tariffs. Increased uncertainty may delay occupier decisions and soften office demand this year, though the city’s strong fundamentals—strategic location, political neutrality and policy stability—will reinforce its safe-haven appeal and
draw flight-to-safety capital.
draw flight-to-safety capital.
RENTS ROSE AMID LOWER CBD VACANCIES
CBD Grade A office rents rose 0.6% qoq in Q2 2025, as vacancy rates tightened to 5.2%, from 5.8% in the previous quarter amid tightening supply and continued flight to quality. Vacancies remain low across most existing CBD Grade A buildings; excluding space from the newly completed Keppel South Central, the overall vacancy rate would fall to 3.9%. CBD Grade A office net
demand held steady at 0.2 msf for the second consecutive quarter, largely driven by relocations and/or expansions of financial institutions.
Decentralised office rents across all grades rose 0.2% qoq in Q2 2025, driven mainly by grade A developments. However, rental growth was more subdued as decentralised office vacancy rates edged up to 7.2% in Q2 2025, from 6.7% in the previous quarter, with key office occupiers generally still favouring the CBD.
LIMITED NEW SUPPLY TO SUPPORT RENT LEVELS
Barring a sharp economic downturn, landlords of Grade A office buildings in the CBD are likely to hold firm on asking rents, supported by limited upcoming supply. No new CBD Grade A completions are expected in H2 2025, and annual new supply over the next two years is projected at 0.3 million sf (msf), only one-third of the historical annual net demand of 0.9 msf. While CBD Grade A supply
will rise to around 2.4 msf in 2028, about one-third of these spaces is expected to be pre-committed.
A tight supply pipeline is expected to support moderate office rental growth in 2025, even as global uncertainties weigh on demand. That said, the current economic uncertainties may extend the leasing period for vacant office space, as occupiers facing ongoing capital expenditure (CapEx) constraints adopt a more cautious approach to decision-making. Landlords offering flexible
solutions, such as fitted-out units, will remain better positioned in the current market.
