Singapore CBD Grade A Office Rental Market Trends (2022-2025)

Key Findings

Commercialcapital Research • 15th Feb 2025

Key Observations

  1. 2022: Grade A office rental growth (5.9%) nearly matched the high inflation rate (6.12%), indicating strong market resilience during a period of significant price increases.
  2. 2023: Rental growth (1.1%) significantly lagged behind inflation (4.82%), showing a major disconnect as the rental market cooled while inflation remained elevated.
  3. 2024: Mixed signals depending on data source:
    • CBRE data (0.4% growth) shows rental growth significantly below inflation
    • URA Category 1 data (4.9% growth) shows rental growth outpacing inflation
    • This divergence likely reflects differences in property basket composition and methodology
  4. 2025 (Forecast): Rental growth (2-3%) is expected to slightly outpace inflation (1.5-2.5%), suggesting a market recovery and return to real growth.

Inflation Correlation

  • 2022: Rental growth (5.9%) nearly matched inflation (6.12%), demonstrating market resilience
  • 2023: Rental growth (1.1%) significantly lagged behind inflation (4.82%), representing a real decrease in rental costs when adjusted for inflation
  • 2024: Mixed performance with rental growth either lagging (CBRE data: 0.4%) or outpacing (URA data: 4.9%) inflation (2.4%)
  • 2025 (Forecast): Rental growth (2-3%) expected to slightly outpace inflation (1.5-2.5%)

Singapore CBD Grade A Office Rental Growth vs. Inflation (2022-2025)

Annual comparison of Grade A office rental growth rates against inflation indicators

Year Grade A Office Rental Growth CPI Inflation Rate Core Inflation Rental Growth vs. Inflation
2022 5.9% 6.12% N/A Lagged slightly (-0.22%)
2023 1.1% 4.82% 4.2% Significantly lagged (-3.72%)
2024 0.4% (CBRE) / 4.9% (URA) 2.4% 2.7% Mixed: Lagged (CBRE) / Outpaced (URA)
2025 Forecast: 2-3% Forecast: 1.5-2.5% Forecast: 1-2% Expected to slightly outpace

Source: CommercialCapital Research analysis of data from CBRE, URA, Singapore Department of Statistics, and MAS

Market Dynamics

  • Supply: Extremely limited new Grade A office supply in Core CBD until 2028, with only IOI Central Boulevard Towers (2024) as a major addition
  • Demand: Moderated but positive net demand for three consecutive years (2022-2024), with a shift from larger deals (>100,000 sq ft) in 2022-2023 to smaller deals (<50,000 sq ft) in 2024
  • Vacancy: CBD Grade A office vacancy rate rose to 8% in Q4 2024 (highest since Q1 2018) due to IOI Central Boulevard Towers completion, before improving slightly to 7.7% in Q1 2025

Notable Transactions

  • IOI Central Boulevard Towers achieved over 80% occupancy by Q1 2025
  • Flight to quality trend continued with companies seeking superior specifications and connectivity
  • Technology sector reduced footprint as firms switched focus from growth to profitability
  • Co-working operators like Smartworks and The Great Room continued expansion

Comparative Analysis

  • Grade A offices outperformed general offices in 2024 and early 2025, reversing the trend from 2023
  • The most significant divergence occurred in 2023, when Grade A rents grew modestly (1.1-1.2%) while general office rents surged (13.1%)
  • Grade A rents showed greater stability with less pronounced quarterly fluctuations compared to general office rents

Outlook

The Singapore CBD Grade A office market is expected to maintain stability with potential for modest growth in 2025-2027, supported primarily by supply constraints rather than strong demand growth. The flight to quality trend will continue to benefit premium Grade A properties, while evolving work patterns and potential AI adoption impacts remain wildcards that could affect space requirements in the medium term.
The outlook suggests a bifurcated market where premium Grade A buildings outperform, with forecast rental growth of 2-3% for 2025, while the broader office market experiences more moderate growth of 1-2%. This divergence is expected to persist due to limited new supply in the Core CBD until 2028 and ongoing tenant preference for high-quality spaces with superior specifications.

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