Singapore CBD Grade A office rents to rise by up to 7% in 2027

Tight supply is expected to support rental growth.

Singapore’s Grade A CBD office market is expected to maintain its positive momentum over the next two years, with limited premium office supply and resilient occupier demand supporting further rental growth, according to Savills.

In its latest outlook for the Singapore office sector, Savills said there is currently limited evidence that corporate adoption of artificial intelligence (AI) is reducing office demand among Grade A CBD occupiers. While AI adoption remains a developing trend, many non-technology companies are still experimenting with applications or have yet to integrate AI fully into their operations.

Savills said the fundamental drivers of office demand remain largely unchanged, although businesses are facing additional uncertainty from factors such as recent Liberation Day tariffs and pressure on corporate operating margins.

However, any resulting impact on office occupancy is expected to emerge gradually rather than immediately, according to the consultancy. Savills noted that office leasing decisions are typically long-term in nature, with most occupiers committing to three- to five-year leases and multinational corporations often taking five-year terms for larger office footprints.

Existing lease obligations, along with relocation and reinstatement costs, mean companies cannot easily reduce office space in the short term even if business conditions deteriorate, Savills said.

Meanwhile, supply constraints continue to underpin the market outlook. Savills highlighted that the availability of Grade AAA office buildings with premium locations, superior views and strong connectivity remains limited, creating a market environment with little spare capacity.

Although Singapore continues to attract technology start-ups and new businesses, Savills said many early-stage companies typically occupy smaller footprints, use co-working spaces or operate under hybrid working models.

However, if even a modest proportion of these companies begin securing traditional Grade A CBD office space, the impact on rental growth could be significant due to limited supply elasticity, Savills said.

The consultancy pointed to strong leasing momentum in Q2 2026, when net absorption surged to approximately 358,000 sq ft, compared with just 52,000 sq ft in Q1 2026.

The increase in take-up contributed to a decline in CBD Grade A office vacancy to 5.6%, a level Savills said is likely below what could be considered a normal equilibrium vacancy rate for the market.

As available space became increasingly scarce, landlords gained greater pricing power, resulting in stronger rental growth during the quarter.

Based on the tighter market conditions, Savills revised upwards its 2026 Grade A CBD office rental growth forecast from 3%-5% to 5%. The consultancy expects rents to increase by a further 5%-7% year-on-year in 2027.

Savills said the forecast is based on a market operating with limited slack, where constrained premium office supply and low vacancy levels mean incremental tenant demand can quickly translate into higher rents.

Well-located Grade AAA buildings are expected to remain the strongest performers due to their accessibility, amenities and building specifications, with supply of such assets remaining inelastic over the medium term.

Looking beyond 2027, however, Savills said the long-term impact of AI adoption on office demand remains uncertain.

The consultancy outlined two possible scenarios: one in which AI-driven productivity gains stimulate economic growth, business creation and office demand; and another where widespread automation reduces employment growth and weakens demand for physical office space.

Savills said neither outcome is expected to materially affect occupier demand within its current forecast horizon, with any structural impact from AI-driven economic changes more likely to become visible towards the end of 2027 or beyond.

For the near term, Savills expects Singapore’s premium office market to remain supported by tight supply, strong occupier demand and landlords’ continued pricing power.