Three floors of Suntec Towers 1 and 2 are on the market for S$135 million, and the price per square foot tells you everything you need to know about where capital is flowing right now. At S$3,350 psf with yields above 4%, this isn't just a property listing. It's a signal that Grade A office space in our CBD is still the place serious investors are parking money, and it's worth understanding why, whether you're thinking residential or commercial.
Look, the world talks about office headwinds. Hybrid work, rising vacancy, companies downsizing their footprint. But here's what I'm seeing on the ground in Singapore: premium Grade A space in the CBD, especially at Suntec, isn't moving the needle downward. That S$3,350 psf figure aligns with what similar floors in Suntec traded for earlier in 2025, sitting right at that peak range of S$3,200 to S$3,350 psf.
The reason is supply. The CBD has limited premium office inventory, and Suntec's location, tenant quality, and building credentials mean it's in constant demand. Financial services firms, professional services, law firms, consulting houses, they're all here. Occupancy rates stay north of 95%, and that's the foundation of a yield-bearing asset. Without tenants paying rent on time, those 4% yields don't exist.
Let's talk money. A yield above 4% on a Grade A office portfolio in 2026 is genuinely competitive. Compare that to what private residential condos are pulling in right now, typically 2 to 3% net annual returns. The gap matters when you're thinking about where to deploy capital, especially in an environment where interest rates have kept borrowing costs elevated.
What makes this spread possible? Commercial office leases are typically longer, more stable, and indexed to inflation. Tenants are corporates with creditworthiness, not individual residents. You don't get broken leases or sudden vacancies from job loss the same way you do in residential. And right now, with the 10-year Singapore Government bond yielding around 2.8%, a 4% office yield actually covers your cost of borrowing plus margin, assuming you can get financing at reasonable terms.
For investors, this is the reality check. If you've been holding residential purely for yield and assuming capital growth alone would get you there, commercial Grade A is now a genuine alternative. That doesn't mean run out and buy office space today, but it means your portfolio mix deserves a second look.
Here's a structural truth that supports these prices: supply growth in the CBD is capped. The Urban Redevelopment Authority's CBD 2023 Master Plan allocates just 1.36 million square meters of new office space through 2028. That's not much when you factor in the total CBD footprint and demolitions of older stock. Suntec, as a prime Grade A asset, benefits directly from this scarcity.
What does that mean practically? Landlords and investors can hold prices steady without cutting rents or offering concessions, because there's no flood of new supply coming to undercut them. Occupancy remains sticky in the 95% range, and rental reversion happens at 3 to 5% per annum, which is solid income progression. That's baked into the 4% yield calculation, and it's why S$3,350 psf holds even when there's noise about global office challenges.
Cooling measures on commercial financing (60% Loan-to-Value caps) do limit leverage, which means you need cash reserves or a strong balance sheet to buy in. That keeps the market tight and keeps prices premium. It also means retail or first-time investors get priced out, and serious capital takes priority.
If you're a residential condo investor: This Suntec deal should make you pause. You're holding assets yielding 2 to 3% while commercial Grade A is clearing 4%+. That capital might work harder elsewhere. You don't need to sell today, but when you're considering new money, ask yourself where it goes. Residential capital growth is still a story in good locations, but the income side isn't competitive right now. A portfolio that was 100% residential five years ago might deserve to be 70 or 75% residential now.
If you're an HDB upgrader or first-time private buyer: This doesn't directly affect your decision, but it's context. Those S$3,350 psf office numbers highlight why private residential stays priced where it does, typically S$2,200 to S$2,800 psf depending on location and age. The CBD is premium, and that premium is justified by actual corporate demand and credit tenancy. When you're evaluating a condo purchase, keep that yield tension in mind. Residential appreciation is your upside, not immediate income.
If you're a serious investor or family office: Grade A office space at S$3,350 psf with 4%+ yields and long-term tenant demand is worth active consideration. Verify occupancy rates (Suntec should be 95%+), check lease structures and reversion terms (3 to 5% annual growth is standard), and understand your exit. Watch interest rate movements because if SOR comes down toward 2.5% by end-2026 as some forecasters suggest, cap rates could compress and prices could move higher. This is a hold-for-income play with modest capital appreciation, not a flip.
One more practical note: monitor URA data on office vacancy and supply. Global economic slowdown does matter, especially for MNC occupancy. And rising energy costs for Grade A fit-outs affect reversion potential. That said, Singapore's brand and Suntec's tenant roster are solid hedges against those headwinds.
The bottom line is this. Three floors of Suntec at S$135 million at S$3,350 psf represents stable, income-generating commercial real estate competing hard for your capital against residential. That's not changing soon, and understanding that competition is part of smart portfolio strategy right now.
Want to explore how this fits your own situation, whether residential, commercial, or mixed? I'm here to talk through it with you. WhatsApp me at +65 97501055 or visit keithtanboonkee.com. I'll give you the straight story based on 25 years watching this market shift and settle.
25 years experience · 1,000+ transactions · 4,379 TOP units managed
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