http://www.businesstimes.com.sg/prem...rents-20130828

Published August 28, 2013

FCL chief sees bottom for office rents

By Kenneth Lim [email protected]


[SINGAPORE] Ahead of a possible listing, Frasers Centrepoint Ltd (FCL) chief executive Lim Ee Seng said yesterday that office rents may have hit a bottom, while suburban malls and hospitality should provide resilience for the property developer.

Suburban malls have provided dependable growth for FCL even during economic trouble spots such as the Severe Acute Respiratory Syndrome (Sars) outbreak and even the global financial crisis, Mr Lim said.

"Irrespective of the economic cycle . . . we don't see a dip in the earnings of these malls, so they are very resilient," said Mr Lim, whose company owns and manages about 6.8 million square feet of net lettable area in commercial and retail space. "So we have confidence in suburban malls."

The hospitality business is also a consistent growth driver, Mr Lim said. FCL, which owns mostly serviced apartments, is currently looking into a possible listing of a hospitality real estate investment trust (Reit). Strategic partner TCC Group, controlled by FCL parent Fraser and Neave's major shareholder Charoen Sirivadhanabhakdi, also holds a number of hotels that could potentially be injected into the hospitality Reit as well.

Mr Lim said that the hospitality business now has about 8,000 units.

"In the next three years, we expect to put in at least more than 6,000 units," Mr Lim said.

The Singapore residential market is beginning to feel the effects of cooling measures that have been imposed by the government.

"The government measures are slowly taking effect, coupled with the supply that is coming up and stabilising property prices," he said. "In my opinion this is good, because if the prices can stabilise, this will not force the government to come out with more measures. So for FCL, going ahead, we will still participate in the bids if they are well-located sites."

The office space is currently undergoing some pressure, but it could be bottoming, Mr Lim added.

"The office market has its ups and downs," he said. "For us, we look at the long term for investment. And I think the office market is at the bottom at this stage. We should see some recovery down the road, maybe in 3-5 years' time."