S-Reits with Singapore office assets post resilient Q1 2025 amid positive rent reversions and high occupancy

[SINGAPORE] Singapore-listed office real estate investment trusts (S-Reits) reported a broadly resilient performance in the first quarter of 2025, underpinned by positive rental reversions, stable occupancy, and continued demand for prime office space despite macroeconomic uncertainties.

The six S-Reits with Singapore office exposure – CapitaLand Integrated Commercial Trust (CICT), Mapletree Pan Asia Commercial Trust (Mpact), Suntec Reit, Keppel Reit, OUE Reit, and Lendlease Global Commercial Reit (LReit) — recorded positive rental reversions for their local office assets, with some achieving double-digit growth.

Keppel Reit, a pure-play office S-Reit with mostly Singapore assets, reported positive rental reversion of 10.6 per cent across its portfolio, supported by new leasing demand and expansions from financial and technology tenants. Attributable net property income from its Singapore portfolio rose 3.3 per cent on year to S$66.4 million in Q1 2025.

LReit also reported a 13 per cent rental uplift for its Jem office lease, while Suntec Reit reported a positive rental reversion of 8 per cent for its Singapore office portfolio in Q1 2025, its 27th quarter of positive rent reversion.

CICT and OUE Reit posted rental reversions of 5.4 per cent and 9.9 per cent, respectively, for their office portfolios, while Mpact achieved 2.2 per cent at Mapletree Business City (MBC) and 7.4 per cent at its other Singapore office assets.

Occupancy across S-Reits Singapore office portfolios remained healthy.

Suntec Reit’s office portfolio maintained high committed occupancy of 98.7 per cent, while Keppel Reit, OUE Reit and CICT similarly reported committed occupancies ranging between 96.3 and 97.9 per cent for their Singapore office assets.

Mpact’s Singapore assets had occupancy ranging from 91.2 per cent at MBC to 99.5 per cent elsewhere, while LReit’s Jem office building was fully occupied.

Leasing activity was driven by tenants in the financial services, technology and professional services sectors. 

Looking ahead, Reit managers observed that tenants are likely to be more cautious in terms of demand for office space given potential headwinds from geopolitical tensions, slower global growth, and cautious business sentiment.

However, limited supply of new office space expected in Singapore’s core CBD area from 2025 to 2027 is expected to support rental stability. 

Managers also noted that the flight-to-quality trend remains prominent in Singapore’s office sector, with newer office developments in prime locations better positioned to weather the uncertainty.

The six S-Reits trade at an average price-to-book ratio of around 0.64, slightly below the sector average of 0.73, according to Bloomberg data.

Reit managers expect performance of their Singapore office assets to remain stable. Suntec Reit noted that rent reversion for its Singapore office assets is expected to be modest, in the range of positive 1 to 5 per cent.

Property consultancy JLL said in its Q1 office market report that Singapore’s office rents registered a fourth consecutive quarter of marginal growth of less than 1 per cent quarter on quarter. 

It noted that office demand should stay positive, driven by supportive government policies and businesses seeking to capitalise on South-east Asia’s growing need for wealth management, fintech and artificial intelligence solutions. 

JLL added that the positive demand coupled with limited new supply are expected to keep office rents and capital values on a stable to modest growth path over the next 12 months, barring any unforeseen economic shocks.

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the S-Reits & Property Trusts Chartbook.