High interest rates, economic conditions impact office demand

Still, a recovery in 2025 is anticipated as the global economy improves.

Office rent growth in Singapore stalled in the third quarter of 2024 as occupiers pushed back against rent increases amidst rising vacancies, according to a report by JLL.

Whilst investor sentiment improved after the September rate cuts, it has yet to lift office sales transactions or capital values, it added. Sluggish global economic conditions and high interest rates continue to impact office demand, with tenants moving to higher-quality buildings.

The completion of Phase 2 of IOI Central Boulevard Towers led to a rise in office vacancies for the second consecutive quarter, but JLL expects these vacancies to decline as tenants move into the new building.

Shaw Tower’s completion has been delayed from 2025 to 2026 due to construction issues, easing some immediate supply pressures. Keppel South Central will be the only office completion in 2025.

JLL forecasts that office rent growth will remain modest through 2024, with a more substantial recovery anticipated in 2025 as the global economy improves. Capital values are expected to remain restrained but could also rebound in 2025, supported by better market conditions and a more favourable interest rate environment.