RESILIENT ECONOMIC BACKDROP
Singapore’s GDP growth forecast for 2026 remains at 2.0-4.0%, following a robust 6.0% expansion in Q1 2026. Growth was supported by continued strength in the finance and insurance, information and communications, and professional services sectors. While hiring activity has moderated amid global uncertainty, low unemployment points to a resilient labour market, and still-low interest rates should support business investment. As a regional business hub and safe-haven market, the city-state remains an attractive base for multinational corporations, underpinning office demand.
TIGHT SUPPLY CONTINUES TO SUPPORT RENTS
Supported by tight supply conditions, CBD Grade A office rents rose 0.9% qoq in Q2 2026, easing from 1.4% previously. A limited availability of prime space coupled with flight-to-quality demand has driven vacancy in several submarkets lower. Most notably in Marina Bay, where Grade A vacancy tightened for a fifth straight quarter to 2.1%, matching its Q3 2019 low. Nonetheless, CBD Grade A vacancy rose to 4.7% in Q2 2026 from 4.3% in the previous quarter, following the completion of Shaw Tower. Strong take-up at this new development, lifted CBD Grade A net demand to 0.3 msf in the quarter, up from 0.05 msf in Q1 2026.
GROWTH TO UNDERPIN BY TIGHTENING VACANCIES
After rising 2.2% in H1 2026, CBD Grade A office rents are projected to grow 4-5% yoy for the full year, above 2025’s 2.4% increase. Rental growth should remain supported by tight supply, with no major office completions in H2 2026 and only Newport Tower (0.2 msf NLA) expected in 2027. This is likely to push vacancy down to under 4% by end-2026. New CBD Grade A office supply is expected to remain below historical net demand for most years through 2031. While financial services occupiers are expected to remain a key source of demand, AI firms are emerging as a growing occupier segment, drawn by Singapore’s deep talent pool and supportive innovation ecosystem. According to media reports, several AI firms have announced plans to expand their presence in Singapore, which could contribute to future demand for premium office space.
