Office rental index grew 0.4% q-o-q, amidst global uncertainty

Kalynskye Adrian

/ EdgeProp Singapore

January 23, 2026 3:58 PM SGT

kalynskye.adrian@edgeprop.sg

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By 2H2025, lower interest rates created a more investment-friendly environment, while most vacant offices were being taken up. IOI Central Boulevard Towers is now over 95% occupied, while Keppel South Central has achieved 35% commitment. (Photo: Albert Chua/The Edge Singapore)

The URA’s office rental index rose 0.4% q-o-q in 4Q2025, rebounding from a 0.1% q-o-q decline in the previous quarter. URA data showed this translated into 0.3% y-o-y growth, reversing last year’s stagnation.

Chua Yang Liang, head of research and consultancy, Southeast Asia, JLL, said in a release: “This marked two consecutive years of sub-1% annual growth, the longest period of modest rental variation since URA began tracking this data series.”

Leonard Tay, head of research at Knight Frank, attributed the muted growth to occupiers’ cautious approach to expansion amid economic uncertainty and limited relocation options. According to Tay, most preferred to renew current leases instead.

JLL’s Chua added that easing interest rates and the absorption of vacant office space also supported the recent uptick. In 1H2025, high interest rates constrained expansion as companies required headquarter approval for new capital expenditure, while office supply grew from new completions and secondary spaces. Key additions included 1.26 million sq ft at IOI Central Boulevard Towers in 3Q2024 and 0.6 million sq ft at Keppel South Central in 1Q2025.

By 2H2025, lower interest rates created a more investment-friendly environment, while most vacant offices were being taken up. IOI Central Boulevard Towers is now over 95% occupied, while Keppel South Central has achieved 35% commitment.

Vacancy tightens as supply eases

According to URA, office vacancy rates tightened slightly to 11.1% in 4Q2025 from 11.2% in 3Q2025. Net demand remained at 1,000 sq m, while net supply fell by 7,000 sq m, reflecting no new office completions during the quarter.

Tricia Song, head of research for Singapore and Southeast Asia at CBRE, added: “Demand was supported by a continued flight to quality, as occupiers sought premium, well‑located, and ESG-compliant premises during relocations, with some securing additional space for future needs.”

JLL’s research noted that CBD Grade A office rents rose 1% over the last two quarters of 2025. Catherine He, head of research at Colliers, said: “This aligns with Colliers’ Core CBD Premium and Grade A rents, which rose 0.8% q-o-q, delivering 1.2% growth for the full year.”

Meanwhile, office prices fell 0.7% q-o-q in 4Q2025, extending a gradual downward trend that began in 2Q2024. This followed a 0.2% q-o-q decline in the previous quarter.

URA data showed a 2.1% y–o-y dip for 2025, which Colliers’ He believes is due to “strata transactions outside the core CBD” and “contrasts with the price trend of prime Grade A core CBD office projects, which has seen renewed investor interest”.

Office market outlook 2026

According to CBRE, the office market is expected to become increasingly landlord-favourable in 2026, supported by steady demand and limited supply. The only major new completion will be the redevelopment of Shaw Tower — spanning 0.4 million sq ft — slated for mid-2026, which will further tighten supply.

JLL’s Chua says: “Tenants will increasingly compete for limited space in quality CBD office buildings” especially amid a sustained flight-to-quality trend. Demand drivers include financial services, technology, asset management, and emerging AI‑focused firms, says CBRE’s Song.

Knight Frank’s Tay added that the market is likely to remain stable in 2026, with moderate annual rental growth of 3% to 5%.

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