DBS Group Research said concerns over an influx of new office space in the Singapore market have eased given high pre-commitment rates for major developments, The Edge Singapore reported on Monday.

Two major developments have hit 70% of pre-commitment rates, alleviating worries regarding the 2 million square feet of new office supply, analyst Dale Lai said.

The absorption should lead to a continued upward trend on Grade A rent, especially with limited new supply in the core central business districts for the next three years.

Meanwhile, the equity research firm sees office Singapore REITs (S-REITs) with a heavy concentration in Singapore and Australia assets benefitting significantly from potential interest rate cuts.

With high leverage, these REITs are sensitive to changes in financing costs and could see higher profitability and valuations, Lai said.

Lai has selected Keppel REIT (SGX:K71U) as a top pick, citing its strong Singapore portfolio and attractive yield.