Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

Singapore Office Market Poised for Another Robust Year in 2022

Amanda Phua • 07/02/2022
  • CBD Grade A office rents projected to grow by 4.6% year-on-year

  • More office investment deals expected with CBD Grade A office capital values to rise by over 6%

  • Technology and financial occupiers to fuel office demand

Following a strong recovery in office demand, reduced vacancies and growth in CBD Grade A office rents in 2021, the Singapore office market is expected to further pick up pace in 2022. According to Cushman & Wakefield’s ‘Singapore Office Market Outlook 2022’ report, the projected economic growth of 3.6% in Singapore coupled with the positive economic outlook globally and regionally bode well for another robust office market this year, barring any unforeseen circumstances.

Wong Xian Yang (黄显洋), Head of Research, Singapore at Cushman & Wakefield - “The Singapore office market bottomed out in 2021 as demand continues to recover amidst a flight to quality. Looking ahead, Singapore’s CBD Grade A office rents are projected to grow by 4.6% year-on-year with vacancy rates tightening to below 4% by end-2022, against a backdrop of projected sustained demand of 0.9 million sq ft (msf) and limited supply of 0.8 msf this year.”

“With anticipated strong rental growth, investors looking to deploy capital into safe haven assets with healthy returns will find the Singapore office market appealing. We may see higher office investment deals done with the Singapore market poised to outperform the broad Asia Pacific market in 2022. As the market continues to recover and with limited stock available for sale, buyers are price-takers. Amidst ample liquidity and keen demand, office capital values are expected to run up and cap rates could compress further, despite rising interest rates. Assuming cap rates tighten to 3.10% in 2022 from 3.15% in 2021, CBD Grade A capital values could increase by over 6% this year,” - Shaun Poh (傅子伟), Executive Director and Head of Capital Markets, Singapore at Cushman & Wakefield.

Technology and financial occupiers will continue to be major sources of office demand in 2022. Singapore is a prominent tech hub globally with 88 of the world’s top 100 technology companies operating in Singapore and 59% of tech multinationals establishing their regional headquarters in Singapore1.

Mark Lampard, Executive Director and Head of Commercial Leasing, Singapore at Cushman & Wakefield - “As these tech companies grow, their appetite for CBD Grade A office space would expand. However, given limited Grade A spaces within the CBD, some would start exploring city fringe Business Park space, following the likes of Google, Razer and Grab, as they outgrow their current premises. While this could create sizable pockets of space in the CBD over the mid-term, they could be filled by future demand from future tech firms. Singapore has a vibrant start-up scene with over 4,000 tech startups locally and access to a large concentration of startups in Southeast Asia. Given favorable funding conditions and the exponential growth of the digital economy, the number of tech firms is set to grow, providing a steady pipeline of demand for office spaces.”

Crypto companies are another potential source of office demand driven by the booming crypto economy. The global crypto-currency market is expected to reach US$4.9 billion by 20302 and Singapore aims to position itself as a global hub for crypto-related businesses. While office demand for crypto companies in Singapore is relatively small at present, this demand could grow amidst the evolving digital currency landscape.

Financial companies will continue to be a major driver of office demand with more asset managers setting up shop in Singapore. The total assets under management (AUM) managed by Singapore-based asset managers grew to a record S$4.7 trillion as of end-2020, a 17% growth from S$4.0 trillion in 20193. This is in line with the growth of family offices in Singapore, which has seen a ten-fold increase between 2017 and 2020. 

Based on Cushman & Wakefield’s Experience per SF™ (XSF)4 survey, employees in Asia Pacific, including Singapore, generally prefer to work from the office with increased flexibility to work remotely. As more employees return to office, there will be a higher focus on workplace strategy. Office fit-out design is placing a greater emphasis on collaborative spaces and some firms are turning to landlords to provide this type of space and amenities within the building for shared purposes. This is expected to further propel demand for prime offices that can provide a holistic work experience.

Obsolescence risk is expected to accelerate with the higher significance placed on environmental, social and corporate governance (ESG) considerations. On the demand front, more corporate tenants are expected to prioritize green office spaces, especially for multinational tech and financial companies who have shown strong sustainability commitments. Buildings which do not meet sustainability standards will see higher vacancy costs and lower rents as they are deemed less favorable in corporate selection evaluations. As such, a wave of CAPEX spend is expected over the next few years, as building owners and investors “future-proof” their office buildings to meet a sustained flight to quality and higher sustainability standards through redevelopment or asset enhancement works.

Mr. Lampard concluded: “While the outlook for the Singapore office market looks promising, there are potential downside risks such as new Covid-19 variants which could reverse re-opening of economies and faster than expected rise in interest rates which could derail the recovery of the global economy. Notwithstanding these potential downside risks, tenants who are delaying their real estate decision making are advised to fast track their planning to optimize the opportunities available in the office market and ‘catch 22’ before it goes away.”

For Cushman & Wakefield's Asia Pacific outlook, click here to download Catch ‘22: Asia Pacific Commercial Real Estate Outlook 2022

 

______________________

1 https://www.pwc.com/sg/en/financial-services/assets/tech-startup-funding-trends-and-outlook.pdf
2 https://www.alliedmarketresearch.com/crypto-currency-market
3 https://www.mas.gov.sg/-/media/MAS-Media-Library/publications/singapore-asset-management-survey/Singapore-AssetManagement-Survey-2020.pdf
4 Cushman & Wakefield’s proprietary tool that statistically uncovers real estate and workplace metrics relating to employees’ engagement and experience.

Related Insights

Singapore
Insights • Insights

Commentary On Q2 2022 URA Real Estate Statistics

New sales volumes picked up in Q2 2022 with 2,397 units transacted, 31.3% q-o-q higher than that in the preceding quarter given robust sales performances at major new launches.
Xian Yang Wong • 29/07/2022
Singapore Market Outlook H2 2022
Research • Forecast - Outlook

Singapore Market Outlook H2 2022

Cushman & Wakefield’s latest Singapore Market Outlook H2 2022 report expects the overall Singapore property market to see relatively strong but slower growth as investors seek out safe havens for wealth preservation and diversification amidst global uncertainties.
Xian Yang Wong • 28/07/2022
Data-Center-Update_APAC_web-card-1221
Research • Data Center

APAC Data Centre Update

H1 2022

Major APAC Markets Continue to have tight vacancy rates even as data centre deliveries and development pipelines reach new milestones. Collectively, the markets of Hong Kong, Singapore, Sydney, Tokyo, and Jakarta have nearly 750 MW in total under active construction.
20/07/2022
istockphoto-2022-cardimage-Policy--Watch-SG
Insights • Investment

Cushman & Wakefield's Comments On Ura May 2022 Developer Sales

On the back of more launches in May, developers sold 1,356 new private homes (excluding ECs) last month – the highest monthly volumes since November 2021 when 1,547 new units were sold.
Xian Yang Wong • 15/06/2022
Navigating a High Inflation Environment
Research • Inflation

Navigating a High Inflation Environment

This report explores the implications of high inflation for real estate, and presents key strategies for owners, investors and occupiers to forge ahead in the inflationary environment. 
26/04/2022
Singapore Carbon Tax 2022 card
Research • Sustainability

Singapore Carbon Tax 2022

What Will The Singapore Carbon Tax Cost You?
Rebecca Jinks • 29/03/2022
istockphoto-2022-cardimage-Policy--Watch-SG
Insights • Investment

Policy Watch Singapore: Budget 2022

Over the last two years, the Singapore Government dedicated a total of close to S$100 billion to combat the impact of Covid-19. 
Xian Yang Wong • 21/02/2022
Singapore Office Market Outlook 2022
Insights • Office

Singapore Office Market Outlook 2022

Following a strong recovery in office demand, reduced vacancies and rental growth last year, the Singapore office market is expected to further pick up pace in 2022.
Xian Yang Wong • 08/02/2022
istockphoto-connect-cardimage
Insights • Data Center

WEBINAR | Data Centre Sustainability in Greater China

As China aims to hit peak emissions before 2030 and for carbon neutrality by 2060, a challenging transition in the power-consuming data centre industry is expected – to sustain the industry’s development and fulfil new standards.
Summer Chen • 03/12/2021
Data center
Research • Sustainability

WEBINAR SERIES | THE SUSTAINABILITY IMPERATIVE FOR DATA CENTRES

With the extremely high consumption of power by data centres and the significant carbon footprint the sector generates, there is a need to strengthen sector-wide standards and commitments for the sustainable data centre operations.
Todd Olson • 29/09/2021
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
MORE OPTIONS
AGREE AND CLOSE
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS