Morgan Stanley Research has released a report indicating that Singapore’s Grade A office market rents are expected to remain stable through 2025, despite a healthy take-up of new office spaces. The report highlights that the IOI Central Boulevard is nearing full occupancy, and the newly completed Keppel South Central has secured Manulife as an anchor tenant. However, these developments are not anticipated to drive up rental forecasts.
The report outlines several reasons for the stable rent outlook. Firstly, market rents, as tracked by property consultant CBRE, have remained steady over the past year, even as IOI Central Boulevard has been leased up. Secondly, anchor tenant rents are typically lower than other leases within the same building on a per-square-metre basis, meaning the new lease at Keppel South Central is unlikely to exert upward pressure on market rents. Lastly, much of the anchor tenant take-up appears to be a flight to quality from older central business district (CBD) office buildings, which could lead to secondary market vacancies and potentially erode rental growth as landlords fill these spaces at lower rents.
Despite the stable rent forecast, Morgan Stanley expects rent reversions—comparing signing rents to expired rents—for listed office landlords to remain in the positive single-digit range this year. This suggests that while overall market rents may not increase significantly, individual landlords could still see some rental growth.
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