http://www.businesstimes.com.sg/sub/...60740,00.html?

Published August 6, 2011

Singapore developers building more suburban office space

Greater demand as companies seek to lower costs and avoid much higher rentals in central biz district

(Singapore)


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Mapletree Business City in Pasir Panjang district, in the southwestern part of Singapore, is where Deutsche Bank has chosen to move part of its operations by next January. The huge office complex is also where SAP took up 135,000 sq ft in January this year.


SINGAPORE'S developers are building more office space in the city's suburbs as companies including Credit Suisse Group AG shift some operations away from downtown to cut costs, according to Cushman & Wakefield Inc.

The city's supply of suburban office space is expected to rise to 920,000 square feet in 2014, five times the 190,000 sq ft that's expected to be completed this year, the world's largest privately held property services company says.

'There are a lot of these companies that are now bracing themselves for higher costs, pending a rise in rentals over the next few years,' Donald Han, Cushman & Wakefield's Singapore- based vice-chairman, said in an interview on Thursday. 'They have to find cheaper options to average down their costs.'

Rents in the central business district are 2.3 times those in the outskirts, according to government data.

Leasing costs are rising on the island-state similar to the size of the city of Chicago as companies expand, making Singapore the world's ninth most expensive office market, Colliers International said.

About 44 per cent of office space will be in the suburbs by 2014, up from 6 per cent now, Mr Han said.

CapitaLand Ltd, Southeast Asia's developer, said its biggest investment commitment this year is a $1.5 billion office and retail building in a western Singapore suburb.

An outskirts project close to subway lines could become a 'sub-hub', Chong Lit Cheong, chief executive officer of CapitaLand's commercial developments, said in an interview on Thursday, prompting the Singapore developer to also 'look out of the central business district'.

Credit Suisse said in a March 17 statement that it plans to move its Singapore operations from five different sites to a downtown building and a location in a northeastern suburb that will be completed in the fourth quarter of 2012.

Switzerland's second-biggest bank will take five floors in the new building called One@Changi City, with each level occupying 315,000 sq ft, it said in the statement. Rents at the new building cost about $4 per sq ft (psf), almost a third of those at its existing downtown location, Mr Han said. Jane Clapcott, a Singapore- based Credit Suisse spokeswoman, declined to comment on rents, citing its lease agreement.

Deutsche Bank AG, Germany's largest bank, will also move part of its operations to Mapletree Business City in the Pasir Panjang district in the southwestern part of the city by January 2012, where it will take 120,000 sq ft of space, said Terence Ng, a Singapore-based spokesman, who also declined to comment on rents.

SAP AG, largest maker of business-management software, took up 135,000 sq ft in January at Mapletree Business City, which is owned by Mapletree Investments Pte, a unit of Singapore's Temasek Holdings.

'We also took into account the many conveniences,' Colin Sampson, chief financial officer for SAP Asia, said in an e-mailed reply to queries, citing onsite eateries, medical and child-care services, as well as proximity to a new subway line. -- Bloomberg