Prime Office Rental Growth Slows 2Q2024 07 Q O Q Knight Frank
According to the latest research report from Knight Frank Singapore, prime-grade office rents are facing slower growth amid weakened demand and a challenging economic climate. The report reveals that rents for prime offices in the Raffles Place and Marina Bay areas have only risen by 0.7% QoQ to an average of $11.28 psf per month in the second quarter of 2024, which is slightly higher than the 0.6% QoQ increase in the previous quarter. With this, the rental growth for the first half of 2024 has slowed down to 1.3%, which is lower compared to the 2.5% growth recorded in the first half of last year. Knight Frank Singapore also points out that landlords are starting to adjust their rental expectations, especially for buildings with available space, as well as the current economic uncertainty that has resulted in businesses putting a hold on expansion and considering more affordable options once their lease ends. There has also been a slight dip in occupancy levels in the second quarter, with offices in Raffles Place and Marina Bay recording an occupancy of 95%, down from 95.6% in the first quarter. Overall, the Central Business District (CBD) occupancy has also dropped from 94.7% to 93.6%. Knight Frank mentions that there is a higher number of decanted spaces available in the market as companies in the financial and technology sectors have begun consolidating their business functions in one location. For instance, Chinese tech firm Tencent has relocated its staff from its previous premises at 30 Raffles Place to CapitaSky on Robinson Road, with plans to shift its staff from CapitaSpring in Raffles Place to CapitaSky when the lease ends. Similarly, US tech giant Meta has started consolidating its office space after laying off staff in 2023. The company will be giving up its 115,000 sq ft space at South Beach Tower and moving its staff to Marina One ahead of the lease expiry in September. In addition, French bank BNP Paribas is also reportedly letting go of some of its space at Ocean Financial Centre when the lease ends at the end of the year. All these factors are putting pressure on landlords to moderate their rent expectations, says Calvin Yeo, managing director of occupier strategy and solutions at Knight Frank. As a result, the rental growth for prime-grade offices is expected to remain muted for the rest of the year, with Yeo estimating an increase of between 1% and 3% for the whole of 2024.
The Master Plan, which also incorporates the establishment of Norwood Grand, aims to transform the community by introducing new parks, waterfront areas, and community amenities. These additions will greatly enhance the overall living experience, providing plenty of opportunities for outdoor recreation and fostering social interactions. This will undoubtedly create a more dynamic and inviting living environment for all residents.