ISSUE 112 | OFFICE Nov 2024
RENTS DECLINE AMID
WEAKER DEMAND
Office Market Trends Q3 2024
|
Vision Exchange
In the third quarter of 2024, prevailing
economic uncertainties and elevated
costs led to a decrease in demand for
office space, resulting in falling rental
rates. The down trend was further
exacerbated by an increase in new
office supply from the previous quarter.
Uncovering Trends Through Data Analytics+
Mountbatten Square
PRICE TREND
In the third quarter of 2024, overall office prices Chart 1 Overall prices grew slower by 0.6 per cent q-o-q
continued to rise, albeit at a slower pace. Recent
interest rate cuts have made bank loans more
affordable; however, uncertain economic
conditions and high costs have kept investors
cautious about new office investments. As a
result, some investors have decided to wait for
more favourable market conditions before
making any commitments.
According to data from the Urban
Redevelopment Authority (URA), the overall
price index increased at a slower pace of 0.6 per
cent from 113.2 in Q2 2024 to 113.9 in Q3 2024.
Office prices within the Central Area and
in the Fringe Area similarly grew slower in Q3
2024, by 0.6 per cent and 0.4 per cent quarter-
on-quarter (q-o-q), respectively.
SALES VOLUME
Chart 2 Overall office sales dipped by 22.7 per cent
Some investors hesitated to invest in
new office units until market conditions
improved. Consequently, fewer offices were
sold last quarter.
Data showed that sales transactions
dipped by 22.7 per cent from 88 units in Q2
2024 to 68 units in Q3 2024. Among the 68
transactions, only one was a new sale.
In the last quarter, total sales value
registered a significant decline of 68.5 per
cent, dropping from S$1.22 billion in Q2 2024
to S$385 million.
Uncovering Trends Through Data Analytics+
Table 1 Top office sales in Q3 2024 (Above $20 million)
Area Transacted Unit Price
S/N Project Name Address
(SQFT) Price ($) ($PSF)
1 Solitaire On Cecil 148 Cecil Street (13th Floor) 13,132 55,150,000 4,200
2 - 6 Raffles Quay #16-XX/XX 10,129 36,000,000 3,554
3 Tong Building 302 Orchard Road (4 units) 6,867 35,000,000 5,097
4 Tong Building 302 Orchard Road (4 units) 6,867 33,500,000 4,878
5 Tong Building 302 Orchard Road (4 units) 6,867 31,330,000 4,562
6 Prudential Tower 30 Cecil Street #01-XX 5,716 26,500,000 4,636
Source: URA, OrangeTee & Tie Research & Analytics
The sale of the entire 13th floor of the upcoming office building, Solitaire at Cecil, totalled $55.1
million, was registered as the highest sale transaction in Q3 2024. This was followed by two
units in an office building along Raffles Quay that sold for $36 million.
Source: Data.gov.sg, HDB, OrangeTee & Tie Research & Consultancy
Copyright © OrangeTee & Tie Pte Ltd. All rights reserved.
Three bulk sales at Tong Building changed hands for $35 million, $33.5 million, and
$31.3 million, respectively. Lastly, a unit at Prudential Tower was sold for $26.5 million.
RENTAL TRENDS
In the third quarter of 2024, many companies remained in their existing office spaces
rather than relocate to another place. This decision was largely influenced by persistent
economic uncertainty and elevated costs, compelling organizations to emphasize cost
management over expansion initiatives.
Some firms outsourced specific business functions, while others focused on retaining
and upskilling their employees. This strategic approach facilitated the implementation of flexible
work arrangements and enabled the optimization of office environments for essential business
operations and collaborative activities.
As a result, fewer leases were signed. Based on data from URA, overall rental
transactions dipped by 1.3 per cent q-o-q to 1,478 from 1,497 in Q2 2024. The number of new
leases signed in the Fringe Area* and Suburban Area** similarly fell by 15.8 per cent and 13.7
per cent q-o-q, respectively. Conversely, there was a 5.4 per cent q-o-q increase in rental
transactions in the Central Area.
Correspondingly, overall office rents registered a marginal decline of 0.5 per cent last
quarter, following a 3.1 per cent growth in Q2 2024 (Chart 4). The decline may be due to an
increase in new office supply, which has put downward pressure on rental prices. Meanwhile,
office rents in the Central Area dipped by 0.5 per cent q-o-q while the Fringe Area posted a 0.2
per cent q-o-q growth.
*Fringe Area: Planning areas within the Central Region, excluding the Central Area
**Suburban Area: Planning areas outside the Central Region
Uncovering Trends Through Data Analytics+
Chart 3 Fewer rental contracts signed in Q3 2024 Chart 4 Overall rents dipped by 0.5 per cent
STOCK AND OCCUPANCY
During the third quarter of 2024, Chart 5 Change in available & occupied office spaces
approximately 36,000 square meters of
available office space were added to the
market (Chart 5).
The increase can be attributed to
the completion of IOI Central Boulevard
Towers at Central Boulevard and Labrador
Tower at Pasir Panjang Road.
Consequently, the vacancy rate for
Category 1 offices slightly increased from
10.1 per cent in Q2 2024 to 10.3 per cent in
Q3 2024. Likewise, the vacancy rate for
Category 2 offices rose from 11.1 per cent to
11.3 per cent during the same period (Chart
6).
Chart 6 Vacancy rate for Cat 1 offices rose slightly
During the same period, there was
an increase of about 17,000 sqm in the total
occupied office stock, following 2
consecutive quarters of decline.
This increase can be attributed to
tenants who had pre-committed to the new
offices and are now moving in to occupy the
newly completed spaces.
Uncovering Trends Through Data Analytics+
Office Market Summary
2021 2022 2023 1H 2024 Q3 2024 Projections
Indicators
y-o-y y-o-y y-o-y q-o-q for 2024
Price Index (% Change)
Overall (Central Region) -5.8% -0.1% -4.2% 1.9% 0.6% NA
Central Area -8.9% 0.3% -6.0% 1.9% 0.6% NA
Fringe Area 8.3% -2.4% 3.9% 2.2% 0.4% NA
Sales Volume (Units)
Total Sale (New Sales + Resale + Sub-sale) 351 316 321 163 68 NA
New Sale 0 1 22 8 1 NA
Resale 350 314 299 155 67 NA
Rental Index (% Change)
Overall (Central Region) 1.9% 11.7% 13.1% 1.3% -0.5% 1% to 2.5%
Central Area 1.2% 11.9% 11.5% 0.9% -0.5% NA
Fringe Area 3.1% 11.6% 18.8% 4.3% 0.2% NA
Rental Volume (Units)
Overall 5,547 6,144 6,261 3,048 1,478 5,900 to 6,100
Central Area 3,987 4,407 4,385 2,064 1,066 NA
Fringe Area 1,261 1,332 1,386 736 299 NA
Suburban Area 299 405 490 248 113 NA
Source: URA, OrangeTee & Tie Research & Analytics
Outlook
Source: Data.gov.sg, HDB, OrangeTee & Tie Research & Consultancy
Copyright © OrangeTee & Tie Pte Ltd. All rights reserved.
Despite the recent interest rate cuts by the Fed, which have made borrowing cheaper, uncertain
economic conditions continue to prompt caution among office space investors and occupiers regarding
their purchasing or leasing decisions. They are likely to prioritize business stability and cost
management. On the supply side, while new office space has entered the market in the past two
quarters, the completion of other projects, such as Keppel South Central and the Shaw Towers
redevelopment, is expected to be delayed. However, we anticipate that office prices and rents will
remain resilient and begin to rise by the end of the year, with the expected addition of another newly
completed office, Paya Lebar Green, to the market.
Please contact us for research inquiries.
For sales enquiries, please contact your preferred OrangeTee agents.
Terms of Use: The reproduction or distribution of this publication without the express consent of the author is prohibited. This publication is
provided for general information only and should not be treated as an invitation or recommendation to buy or sell any specific property or as
sales material. Users of this report should consider this publication as one of the many factors in making their investment decision and should
seek specific investment advice. OrangeTee.com Pte Ltd and the authors of this publication shall not accept and hereby disclaim all
responsibilities and liability to all persons and entities for consequences arising out of any use of this publication.
Copyright © OrangeTee & Tie Pte Ltd. All rights reserved.
