http://www.businesstimes.com.sg/prem...kongs-20130221
Published February 21, 2013
Office rents here half that of Hong Kong's
Govt's push to site office spaces beyond the CBD helps to moderate rents
By Lee Meixian
SINGAPORE'S prime office rents are becoming more competitive, say commercial real estate brokers and consultants Cushman & Wakefield in their latest report, Office Space Across the World 2013.
Rents in the Central Business District (CBD) here last year came in at only half those in Hong Kong, which has the Asia-Pacific's highest rents at HK$104.47 per square foot (S$16.66 psf).
The rental rates in Singapore, ranked 14th in the Asia-Pacific, were $8.61 psf last year; the Republic was the 11th in 2011.
Globally, rents in Hong Kong last year were second only to those in London; Tokyo fell from third to fifth.
Commercial rents here are kept low relative to, say, Hong Kong's, by the government's push to decentralise business activities beyond the CBD; this tempers leasing activity and leaves more vacancies in super-grade A spaces, thus moderating rents.
Last month, for instance, the Ministry of National Development said it plans to provide at least 13 million sq m of commercial space outside the city by 2030, thus spreading out commercial activity to the regional hubs.
According to the Cushman & Wakefield report, Singapore's rents fell 16 per cent year-on-year; this trend was mirrored in regional financial centres such as Hong Kong, where the fall was 26 per cent, and Tokyo, down 11 per cent.
Cushman & Wakefield expects Singapore rents to bottom out, and then to start rising late this year and early next year, buoyed by robust demand.
Toby Dodd, a country manager at Cushman & Wakefield, said: "Rents have reached the bottom of the cycle and will remain steady, given a strong supply pipeline of new buildings, including Asia Square Tower 2 and CapitaGreen."
He added that, with some tenants' giving up their Grade A space in buildings such as One Raffles Quay and Capital Tower to move to locations outside the CBD, Grade A space returns to the market would take place.
He said now was a good time for tenants to secure long-term lease agreements here; banking and financial-sector tenants in Hong Kong looking to cut costs, for example, can consider relocating here.
"Demand is set to remain robust, further underpinning the steady rents. Requirements from the financial sector are forecast to be muted. New tenants from the legal services, professional services and energy industries are expected to command a significant share of new leasing activities this year," he said.
Although prime office rents in Asia's regional financial centres such as Singapore, Hong Kong and Tokyo fell, they inched up 3 per cent over the year Asia-wide on slower economic growth.
Beijing dropped one place to seventh in the global ranking as rents stayed unchanged over the last 12 months; New Delhi rose one rank to fourth on the back of a 25-per-cent jump in prime rents.
Globally, prime rents rose 3 per cent last year despite economic uncertainty, but this increase was largely driven by impressive growth in South America, particularly Brazil and Colombia.