AI giants squeeze office market in Singapore amid rising rents

OpenAI, Anthropic, Google DeepMind and other fast-growing AI companies have established or expanded operations in the city-state as Singapore seeks to become a global artificial intelligence hub.

Their expansion is adding demand to an already tight market for premium offices. Vacancy among the most sought-after office units in the city-state, particularly centrally located properties with strong network connectivity and high levels of security, has fallen to 3.1%, the lowest in 13 years, according to real estate consultancy Savills.

City-center rents could rise by as much as 10% over the next year as companies compete for limited space, the Financial Times reported.

OpenAI is making one of the largest commitments to the city-state. The ChatGPT developer is in talks to lease about 100,000 square feet across five floors of a newly renovated central tower, according to people familiar with the plans.

It has established its first applied AI lab outside the U.S. in Singapore and announced an investment of more than S$300 million (US$237 million). It plans to hire more than 200 employees in the city-state in the coming years, Channel News Asia reported. It recently recruited former Meta executive Sandhya Devanathan to lead its Southeast Asia and Australia operations from Singapore.

Passers-by hold their mobile phones as people take a selfie photo using a smartphone, with Singapore's central business district skyline, in Singapore, May 10, 2019. Photo by Reuters

Anthropic, the developer of Claude, plans to open an office in central Singapore in October, according to The Straits Times. Its recruitment page lists several Singapore-based positions overseeing operations across the Asia-Pacific region.

Google DeepMind has established a research lab in Singapore, while French AI startup Mistral and AI hardware company Plaud plan to have at least 100 employees each in the city-state by the end of the year. Data and AI company Databricks is quadrupling its Singapore office footprint to 32,000 square feet. It employs more than 250 people there and plans to increase its workforce by 50% over the next year.

Alan Cheong of Savills Singapore told the Financial Times that many AI companies were taking considerably more space than they currently needed as they prepared for rapid expansion. "They are flush with cash and they are throwing money around."

The AI companies stand out in a commercial property market where many established businesses are staying in their existing offices rather than relocating. Most Singapore office tenants renewed their leases in the second quarter as relocation costs discouraged moves to larger premises, according to global real estate consultancy Knight Frank.

"The lack of justifiable relocation budgets has resulted in a corresponding lack of urgency amongst corporates to change premises," Tridiana Ong, head of Occupier Strategy and Solutions at Knight Frank Singapore, told Singapore Business Review.

The office expansion comes as Singapore pours public funding into its ambition to become a global AI hub.

The government is investing S$1 billion from 2025 to 2030 in public AI research, Minister for Digital Development and Information Josephine Teo announced in January. That follows more than S$500 million invested from 2019 to 2023.

The latest funding covers fundamental and applied AI research as well as talent development, including new research centers and efforts to attract and train researchers.