http://www.straitstimes.com/Money/St...ry_689665.html

Jul 12, 2011

Office rent upturn a boon for Asia Square

By Cheryl Lim


DEVELOPER MGPA seems to have timed it right, with office rents rising just as the first tower is completed at its Asia Square project.

Global events like the Japan tsunami and the euro zone debt crisis depressed financial markets worldwide, but have since proved a boon for Asia Square.

Rents slowed in the wake of the crises, but strong demand meant that space in competing office blocks was quickly taken up, leaving Asia Square poised to ride on the need for office space.

Mr Luke Moffat, head of leasing at the mixed-use development, said 62 per cent of the 1.26 million sq ft of office space in Tower 1 has already been snapped up.

He added that a further 20 per cent is under negotiation. This could bring the total amount of committed space to around 80 per cent by the year end.

The first tenants will be moving in towards the end of this month.

Marketing for Tower 2, which is set to receive its temporary occupancy licence in August 2013, is expected to start early next year.

'The property market in Singapore is in really good shape in terms of commercial property... The next building coming up after our Tower 2 is Market Street Carpark in 2014, so we have a good run ahead where there's no other new buildings coming up,' said Mr Moffat.

A CBRE report estimates that 8.4 million sq ft of potential office space will come onstream between now and 2015.

A DTZ report predicts that about 3 million sq ft of space, including Asia Square and Ocean Financial Centre, will be on the market this year.

The second tower of the Marina Bay Financial Centre (MBFC) will receive its temporary occupancy licence later this year.

A Malaysia-Singapore joint property venture is also set to develop four sites in the Marina South area.

Mr Moffat said the extra space does not pose any threat to MGPA's office assets here.

'The more supply that is added to Marina Bay... the more compelling the area becomes. Building more office space means the area becomes more vibrant, more of a centre,' he said.

Offices at Asia Square are priced from $14 per sq ft (psf) per month, but the developer said it recently secured a contract at $16 psf, a figure that some industry experts said can be challenging to hit, despite the market's bullish outlook.

But Mr Calvin Yeo, executive director of office services at Colliers International, said unique quality projects - such as Asia Square and MBFC - are few and far between.

'Space on higher floors with views can command a premium, particularly for smaller users because of the lower quantum,' he said.