Occupancy levels in Singapore’s Raffles Place and Marina Bay districts remained steady at 95.4% and 94.1%, respectively, in the first quarter of 2023, indicating the office sector in the country is on an even keel due to demand that is mainly driven by ‘flight to quality’. This is according to a report by property consultancy Knight Frank.

Calvin Yeo, managing director of occupier strategy and solutions at Knight Frank, attributes the healthy occupancies to selected office buildings commencing asset enhancement initiatives (AEIs) or redevelopment, thus removing stock from the market. Furthermore, quality office space remains in demand as businesses continue to relocate their headquarters to Singapore.

As employees start to return to offices, Yeo states that occupiers are increasingly searching for quality office spaces that provide a vibrant and activity-based work environment. For example, the mixed-used development Guoco Midtown, which was completed in January, has Grade A offices that incorporate a wide array of communal facilities to support productivity and lifestyle. It is reported that the office component of the project was 80% filled upon completion.

Although the tech sector has been making headlines, Yeo explains that it is smaller users that have absorbed office shadow space that have emerged from tech firms laying off its staff. This is seen as a ‘flight to quality’ move as businesses choose more modern office settings.

The recent trouble in the banking sector- including the fall of Silicon Valley Bank and the bailout of Credit Suisse- has led to more uncertainty in the global economic outlook. Yeo believes Singapore is in a strong position to remain resilient due to it offering a destination of stability. He predicts that there will be steady demand for office space as occupiers opt for quality settings and cautious expansion.

After a decade of leisure and edutainment, JCube in Singapore’s Jurong East district is to close in August to make way for a 40-storey residential and commercial development, JCube Condo Residence. Estimated to launch for sale in 2023, the complex will be connected to the Jurong Lake District’s amenities, adding to potential housing launches JCube Residence in the area.

Knight Frank expects that prime office rents will remain stable in the coming year, with an increment of 3%. Yeo adds that as overall CBD rents rose moderately in 1Q2023, the office sector in Singapore remains on an even keel due to mainly flight-to-quality demand in a stable ecosystem of cautious expansion despite wider tensions.