Office REITs - DBS Research 2022-12-14: A Year Of Two Halves

Office REITs - A Year Of Two Halves


Economic headwinds could moderate office rent growth momentum going into 2023.

  • Singapore office sector had a good run in 2022 with Grade A Core CBD rent surpassing the pre-COVID high of 2019 (+7.2% in 9M22). As we move into 2023, we expect slowing economic growth to weigh on the office sector.
  • The Singapore economy is expected to slow to 2.2% in 2023 from an expected GDP growth in 2022 of 3.5%, dragged mainly by the manufacturing sector, with also the service sector to possibly run out of steam going into 2023.

Tech and financial layoffs may have an impact; manageable, however.

  • Since 3Q22, the news has been bombarded with tech – and subsequently financial sector – layoffs. While tech has been aggressively expanding its office footprints in the past few years, it takes up only ~10% to 11% of Singapore CBD office. Assuming it scales back all its expansion, vacancy could rise to 3.9% from current 3.1% as at Sep ‘22, which is still below the historical average of 4.6%.
  • On the other hand, the financial sector has been downsizing its office space (-2ppt) while expanding its workforce by 3% to 4% pa. As such, we do not expect major downsizing from the financial sector in the near term. However, vacancy risks will rise if a prolonged recession becomes evident.

Silver lining may keep Singapore office afloat; China reopening a game-changer.

  • Singapore is in a unique position to see some support to its office market. Singapore has raised its global rank as a destination for regional headquarters and family offices. There were 700 new family offices set up from 2019 to 2021 and more than 100 new family offices were approved between Jan22-Apr22.
  • In addition, China’s reopening could be a game-changer to drive economic growth momentum once again from 2H23 depending on the timing of reopening. We prefer Mapletree Pan Asia Commercial Trust (SGX:N2IU) and CapitaLand Integrated Commercial Trust (SGX:C38U) as key beneficiaries of China’s reopening.
  • Continue to read the 17-page report attached below for complete analysis on Singapore office sector.

Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Rachel TAN DBS Group Research | Derek TAN DBS Research | 2022-12-14

More views on outlook of Singapore REIT (S-REIT) sector:
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