News release

Singapore office market performance ends on a strong note in 2021

JLL projects CBD Grade A rent to grow twice as fast in 2022

December 30, 2021

Vernia Lim

+65 9691 3912

SINGAPORE, 30 December 2021 – According to JLL, Singapore’s CBD Grade A office rents have posted a full year growth of 4.2%, far exceeding the firm’s forecast of a 6% contraction made at the beginning of the year. This also came about despite the repeated rolling back of safe management measures to combat new waves of COVID-19 infections. 

CBD Grade A rent bottomed in 1Q21, and turned around in 2Q21. Rent stayed on the recovery path in the subsequent two quarters with q-o-q growth accelerating each quarter and ending 4Q21 with a 1.8% rise, the fastest in 11 quarters. This brought CBD Grade A office monthly gross effective rent to an average of SGD 10.23 per sq ft as of 4Q21, compared to SGD 10.05 per sq ft in 3Q21 and SGD 9.81 per sq ft in 4Q20.

Ms Tay Huey Ying, Head of Research and Consultancy for JLL Singapore explains, “2021 rent growth was fueled by strengthening leasing activity since 1Q21. The recovering economy and smooth rolling out of the national vaccination programme stoked occupier confidence. This encouraged an increasing number of them to plan ahead for business growth and slowed down business cessation as well as downsizing. At the same time, delays in project completions due to COVID-19 related disruptions, coupled with stock withdrawal for redevelopment kept supply tight.

Ms Tay adds, “Office leasing market recovery is, however, uneven, with the newer, greener and better quality assets more sought after than others, and leading in rent growth. As markets normalise and people return to the office, demand for greener, more sustainable spaces and healthy working environments have been amplified and are now of paramount concern.”

This is underpinning the robust take up rate for newly completed projects, as well as the healthy absorption of spaces given up in good quality developments by tenants as a result of their space-rationalisation exercises. For example, Sumitomo Mitsui Banking Corporation reportedly took up close to 70,000 sq ft of space at the newly completed CapitaSpring while L’Oreal moved into its new 67,000 sq ft office at One Raffles Quay, that was released by UBS when they relocated to 9 Penang Road. CGS-CIMB Securities also recently relocated to about 38,000 sq ft at Marina Bay Financial Centre Tower 2 that used to be occupied by Standard Chartered Bank.

Rent recovery amid the pandemic has reinforced the sound fundamentals of Singapore’s office property market. This spurred a flurry of activities in the capital market, that saw sales of assets with predominant office use worth SGD 5 million-and-above hitting a nine-quarter high of SGD 1.9 billion. Sales of such assets have totalled SGD 4.5 billion year-to-date, doubled the SGD 2.3 billion accumulated in 2020.

The largest deal sealed for the entirety of 2021 so far, and completed in 4Q21, was the sale of One George Street from CapitaLand Integrated Commercial Trust and FWD Group to a joint venture between JPMorgan Global Alternatives and Nuveen Real Estate for SGD 1.28 billion. The price translates to approximately SGD 2,875 per sq ft, based on its existing net lettable area of 445,745 sq ft.

Going into 2022, Ms Tay projects, “Assuming market normalization is not derailed by new COVID variants, and barring adverse external shocks, 2022 demand for office space could outpace supply and fuel rent growth that is at least twice as fast as that recorded for 2021.”

Ms Tay rationalizes, “Underpinned by the expected return to normalization of more economies, we foresee business expansions to pick up pace while downsizing and cessation to slow further. Lured by Singapore’s increasingly competitive offerings as a global office hub, more corporates are also expected to set up shop or strengthen their presence in Singapore. These should support office demand growth in 2022.

On the supply front, Guoco Midtown is the only Grade A office project expected to come on stream in the CBD in 2022. Meanwhile, leasing activity has ceased for AXA Tower as it is getting ready for redevelopment. This will further accentuate the tight supply condition, bringing Grade A CBD office vacancy down to 7% or lower by the end of 2022, from 8.6% in 4Q21. Against this backdrop, 2022 Grade A CBD office rent growth could more than double the 4.2% recorded for 2021.”

Ms Tay concludes, “This should intensify investors’ interest in Singapore’s office assets and drive capital value growth.”

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 95,000 as of September 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit