The office market in Singapore declined significantly after 2005, which is why it was unaffected by the slowdown in GDP growth seen in 2014.
Office rents increased, on average, by 12% following a rise in office leasing and sales activity, with sustained broad-based demand from new firms and expanding businesses, mainly from the IT and telecommunications industry and legal service providers.
Demand for smaller spaces (less than 10,000 sq ft) from real economy companies (production of goods and services) continued to dominate the market.
Rents are still well below their 2008 peak so development activity has been relatively slow and the resulting tight supply situation will give landlords a window of opportunity in 2015 to maximise returns in 2016/17.
However, new office supply will increase and likely suppress rental growth again. Occupier demand is being driven by new-to-market companies and those that already have a presence in the city, as opposed to international finance and business services firms seeking a regional base.
This will mean more small-space requirements with flexible leases. Savills expects CBD grade A rents for small spaces (less than 10,000 sq ft) to trend upward by an estimated 12.9% in 2015.