'This is creating a happy problem for landlords'
Singapore's office market is heading for a severe squeeze over the next 12 to 18 months as a wave of artificial intelligence companies scrambles to secure space in the city-state, pushing vacancy levels to historic lows and raising the prospect of double-digit rent increases, The Financial Times has reported.
The warning comes as some of the world's biggest AI firms, including OpenAI, Anthropic, and Google DeepMind, race to establish or expand their Singapore presence.
"This is creating a happy problem for landlords," said Lawrence Tan, associate director at property agency Brilliance Capital, as quoted by The Financial Times.
"There is a real crunch coming in the next 12 to 18 months."
AI companies lifting global real estate
The pressure is part of a global trend. AI companies accounted for 17% of all prime technology sector office deals in the first half of 2026, up from just three per cent two years earlier, according to Savills' latest Market Makers report.
It noted that every single deal by an AI business in that period was expansionary, reflecting the sector's rapid growth and significant capital investment.
Singapore is feeling that pressure acutely: CBD Grade A office vacancy in the city has fallen to 5.6%, with the next wave of new supply not expected until early 2028.
Alan Cheong, executive director of research and consultancy at Savills Singapore, said the higher-grade office market remained resilient.
"Coupled with the limited supply of new office developments, premium office buildings continue to record healthy occupancy levels and rental growth," he said.
Analysts predict city-centre rents could rise by as much as 10% over the next year.
AI firms race to Singapore
OpenAI has emerged as one of the most significant new tenants.
The ChatGPT maker has set up its first applied AI lab outside the United States in Singapore and announced an investment of more than S$300mn (US$237mn), according to The Financial Times report.
It is separately in talks to lease 100,000 sq ft of space across five floors of a newly renovated central tower, enough to accommodate as many as 800 staff. It currently has plans to hire more than 200 staff, many in engineering roles, in the coming years.
Rival lab Anthropic, which counts Singapore's sovereign wealth fund GIC among its investors, is also set to open a city-centre office in October. AI data company Databricks is planning to quadruple its Singapore footprint to 32,000 sq ft by year-end and grow its headcount, currently more than 250, by half within a year.
Google DeepMind, French start-up Mistral, and transcription tool Plaud have each announced plans to reach at least 100 Singapore-based staff by the end of the year, according to The Financial Times.
Cheong told the FT that many AI firms were leasing well beyond their immediate needs.
"They are flush with cash and they are throwing money around," he said.
