Singapore office market two years post-pandemic

The COVID-19 pandemic prompted companies to significantly re-evaluate their workplace strategies. Initially, as the pandemic started to subside and employees began returning to the office, there was a strong expectation that hybrid working models and a shift towards a decentralised work environment would define the future of work. However, two years on, the landscape has evolved once again.

Demand for office space is anticipated to increase in 2025, driven by sustained economic growth, a more favourable interest rate environment, and a growing return-to-office trend. The current availability of office space offers occupiers opportunities for expansion and upgrades before supply tightens between 2025 and 2027.

This tightening supply is further compounded by the expected withdrawal of several office buildings over the next few years. This is due to impending redevelopment and refurbishment works, driven by various incentive schemes. Also, the expiration of transitional office sites previously sold on 15-year leases between 2007 and 2011 is contributing to the tightening supply. Furthermore, in pursuit of yield accretion, more investors are adopting value-added strategies, converting existing office spaces into alternative uses such as co-living facilities, commercial schools, and medical suites. This is further reducing the available office space in the market.

While an uptick in new supply in 2028 may offer some relief, the decision not to award the JLD master developer site has intensified concerns about another potential supply crunch beyond 2028. This situation highlights the need for occupiers to act strategically in securing suitable office space in the near term.

Figure 1: Island-wide office potential supply