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19-04-2016, 06:20 PM
An honorable member of the Coffee Shop Has Just Posted the Following:
Singapore Struggles With Too Much Office Space
In Singapore, prices for central business district prime space fell 14% in 2015, according to data provided by Daiwa, which projects a further 5.4% decline this year. A kite flies in front of buildings at Marina Bay ENLARGE
In Singapore, prices for central business district prime space fell 14% in 2015, according to data provided by Daiwa, which projects a further 5.4% decline this year. A kite flies in front of buildings at Marina Bay Photo: Felix Hug/Corbis
By
Jake Maxwell Watts and
P.R. Venkat
April 19, 2016 2:30 a.m. ET
SINGAPORE—Singapore’s busy skyline is getting more crowded as the supply of office space surges, driving prices lower as developers scramble to attract a dwindling number of prospective tenants.
On the fringes of the city-state’s central business district, the state investment funds of Singapore and Malaysia are close to completing two huge new complexes with a combined 2.5 million square feet of premium office space.
Not far away, Singapore developer GuocoLand Ltd. is just months away from opening the first floors of Tanjong Pagar Centre, which will be the city’s tallest building at 64 stories high. That will add 890,000 feet to the mix.
A rebound in growth after the 2008 global financial crisis prompted many developers to take up new projects at the same time that government-linked construction began. But now, as those projects are coming onstream, demand is beginning to sag. Renewed weakness in the global economy has prompted banks to cut staff and office space, while other businesses are looking to downsize as global trade remains weak.
That is raising concerns about how all this new office space is going to be filled. Forecast demand for 2016 doesn’t meet even half the projected supply.
Standard Chartered PLC recently gave up four of the 24 floors of Marina Bay Financial Centre it originally occupied in 2011 as it looks to consolidate its properties in Singapore. Meanwhile, Australia & New Zealand Banking Group Ltd. and Royal Bank of Scotland PLC are renegotiating with their landlords in Ocean Financial Centre and One Raffles Quay, respectively, as prices fall.
Singapore’s central business district at night and from above on April 9. ENLARGE
Singapore’s central business district at night and from above on April 9. Photo: Bloomberg News
The slumping resources sector also has cut back on space. Australian miner BHP Billiton Ltd. last year gave up four of its 11 floors at Singapore’s premium Marina Bay Financial Centre offices following efforts to cut costs.
Even Alphabet Inc. ’s Google is leaving the city center this year as it looks for a larger property away from the central business district.
“A lot of the supply is coming in at a time when demand is starting to become lackluster,” said Sigrid Zialcita, managing director of Asian research at property-services company Cushman & Wakefield in Singapore. “This is a market that is able to absorb 1.5 to two million square feet [annually],” she said. “Right now there are challenges to even reaching that level.”
Last month, Daiwa Capital Markets downgraded its rating on Singapore office trusts to negative from neutral, estimating that vacancy rates in the central business district are likely to rise to 9.6% in 2016, double the rate in 2015.
Prices for central business district prime space fell 14% in 2015, according to data provided by Daiwa, which projects a further 5.4% decline this year.
The sharp increase in new space this year is largely due to projects being developed by the Singaporean and Malaysian state investment funds Temasek Holdings Pvt. Ltd. and Khazanah Nasional Bhd.
‘A lot of the supply is coming in at a time when demand is starting to become lackluster’
—Sigrid Zialcita, managing director of Asian research at Cushman & Wakefield in Singapore.
Under a joint venture called M+S, the two companies are building a giant new office and premium residential complex called Marina One on land near the central business district, which belonged to Malaysia until 2010. That year, the two countries agreed to return the land to Singapore in exchange for a Malaysian stake in the new development.
The Marina One complex will add about 1.9 million square feet of premium office space to the market, although not all of it will come available this year. The other Temasek-Khazanah project, about two miles north of the central business district, is a giant multiuse complex called Duo, which will inject another 570,000 square feet of space into the market.
Kemmy Tan, chief executive of M+S, played down concerns about a weak property market in Singapore.
“As Singapore continues to entrench itself as a global business hub with more multinational companies making Singapore its international HQ, we are confident that this short blip will ease off in the medium term,” she said. “With the current global economic climate notwithstanding, astute companies will capitalize on this opportunity to take flight to quality.”
Property analysts say Singapore’s long-term prospects aren’t under threat and demand is projected to pick up in 2017 after three years of weakness. In the 50 years since independence, it has emerged as one of Asia’s largest financial centers, attracting many international banking companies.
“There will be an overhang of supply into 2017, unquestionably. But our house view is that by the time you get into 2017, early 2018, that will start to stabilize,” said Chris Archibold, head of markets in Singapore at real-estate services company JLL. Meanwhile, he said, developers are likely to feel the pain. “I think any savvy landlord is cognizant of the fact” that there are millions of square feet out there “trying to woo their tenants. You’d be mad not to be,” he said.
Yet there are already signs that developers are looking for ways to retain existing tenants and attract new ones.
GuocoLand’s 290-meter tall (957-foot tall) Tanjong Pagar Centre, just south of the main central business district, will begin opening up to tenants in the third quarter of this year and has adjusted rents to reflect the market rate. The company’s Singapore managing director, Cheng Hsing Yao, also said GuocoLand is looking to attract tenants who want to renegotiate their existing leases in other locations.
The current tough market conditions are “definitely having an impact,” Mr. Cheng said.
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?228402-Golden-Period-for-SG-Commercial-Properties!&goto=newpost).
Singapore Struggles With Too Much Office Space
In Singapore, prices for central business district prime space fell 14% in 2015, according to data provided by Daiwa, which projects a further 5.4% decline this year. A kite flies in front of buildings at Marina Bay ENLARGE
In Singapore, prices for central business district prime space fell 14% in 2015, according to data provided by Daiwa, which projects a further 5.4% decline this year. A kite flies in front of buildings at Marina Bay Photo: Felix Hug/Corbis
By
Jake Maxwell Watts and
P.R. Venkat
April 19, 2016 2:30 a.m. ET
SINGAPORE—Singapore’s busy skyline is getting more crowded as the supply of office space surges, driving prices lower as developers scramble to attract a dwindling number of prospective tenants.
On the fringes of the city-state’s central business district, the state investment funds of Singapore and Malaysia are close to completing two huge new complexes with a combined 2.5 million square feet of premium office space.
Not far away, Singapore developer GuocoLand Ltd. is just months away from opening the first floors of Tanjong Pagar Centre, which will be the city’s tallest building at 64 stories high. That will add 890,000 feet to the mix.
A rebound in growth after the 2008 global financial crisis prompted many developers to take up new projects at the same time that government-linked construction began. But now, as those projects are coming onstream, demand is beginning to sag. Renewed weakness in the global economy has prompted banks to cut staff and office space, while other businesses are looking to downsize as global trade remains weak.
That is raising concerns about how all this new office space is going to be filled. Forecast demand for 2016 doesn’t meet even half the projected supply.
Standard Chartered PLC recently gave up four of the 24 floors of Marina Bay Financial Centre it originally occupied in 2011 as it looks to consolidate its properties in Singapore. Meanwhile, Australia & New Zealand Banking Group Ltd. and Royal Bank of Scotland PLC are renegotiating with their landlords in Ocean Financial Centre and One Raffles Quay, respectively, as prices fall.
Singapore’s central business district at night and from above on April 9. ENLARGE
Singapore’s central business district at night and from above on April 9. Photo: Bloomberg News
The slumping resources sector also has cut back on space. Australian miner BHP Billiton Ltd. last year gave up four of its 11 floors at Singapore’s premium Marina Bay Financial Centre offices following efforts to cut costs.
Even Alphabet Inc. ’s Google is leaving the city center this year as it looks for a larger property away from the central business district.
“A lot of the supply is coming in at a time when demand is starting to become lackluster,” said Sigrid Zialcita, managing director of Asian research at property-services company Cushman & Wakefield in Singapore. “This is a market that is able to absorb 1.5 to two million square feet [annually],” she said. “Right now there are challenges to even reaching that level.”
Last month, Daiwa Capital Markets downgraded its rating on Singapore office trusts to negative from neutral, estimating that vacancy rates in the central business district are likely to rise to 9.6% in 2016, double the rate in 2015.
Prices for central business district prime space fell 14% in 2015, according to data provided by Daiwa, which projects a further 5.4% decline this year.
The sharp increase in new space this year is largely due to projects being developed by the Singaporean and Malaysian state investment funds Temasek Holdings Pvt. Ltd. and Khazanah Nasional Bhd.
‘A lot of the supply is coming in at a time when demand is starting to become lackluster’
—Sigrid Zialcita, managing director of Asian research at Cushman & Wakefield in Singapore.
Under a joint venture called M+S, the two companies are building a giant new office and premium residential complex called Marina One on land near the central business district, which belonged to Malaysia until 2010. That year, the two countries agreed to return the land to Singapore in exchange for a Malaysian stake in the new development.
The Marina One complex will add about 1.9 million square feet of premium office space to the market, although not all of it will come available this year. The other Temasek-Khazanah project, about two miles north of the central business district, is a giant multiuse complex called Duo, which will inject another 570,000 square feet of space into the market.
Kemmy Tan, chief executive of M+S, played down concerns about a weak property market in Singapore.
“As Singapore continues to entrench itself as a global business hub with more multinational companies making Singapore its international HQ, we are confident that this short blip will ease off in the medium term,” she said. “With the current global economic climate notwithstanding, astute companies will capitalize on this opportunity to take flight to quality.”
Property analysts say Singapore’s long-term prospects aren’t under threat and demand is projected to pick up in 2017 after three years of weakness. In the 50 years since independence, it has emerged as one of Asia’s largest financial centers, attracting many international banking companies.
“There will be an overhang of supply into 2017, unquestionably. But our house view is that by the time you get into 2017, early 2018, that will start to stabilize,” said Chris Archibold, head of markets in Singapore at real-estate services company JLL. Meanwhile, he said, developers are likely to feel the pain. “I think any savvy landlord is cognizant of the fact” that there are millions of square feet out there “trying to woo their tenants. You’d be mad not to be,” he said.
Yet there are already signs that developers are looking for ways to retain existing tenants and attract new ones.
GuocoLand’s 290-meter tall (957-foot tall) Tanjong Pagar Centre, just south of the main central business district, will begin opening up to tenants in the third quarter of this year and has adjusted rents to reflect the market rate. The company’s Singapore managing director, Cheng Hsing Yao, also said GuocoLand is looking to attract tenants who want to renegotiate their existing leases in other locations.
The current tough market conditions are “definitely having an impact,” Mr. Cheng said.
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?228402-Golden-Period-for-SG-Commercial-Properties!&goto=newpost).