Tag Archives: Shenton Way

Singapore’s office rental market expected to go up

Singapore’s office rental market is on the rebound after bottoming out in the last quarter of 2012, according to Cushman & Wakefield.

In its quarterly office market report, the real estate firm said rents are on the rise and vacancies are drying up, though not all office buildings are sharing the comeback.

Cushman & Wakefield’s latest office market report showed that the average rent in prime Grade A locations was up 4.2 per cent in the second quarter, from a quarter earlier, hitting S$9.03 a square foot per month.

That was up from S$8.99 per square foot per month in the first quarter of this year.

Sigrid Zialcita, managing director of research for the Asia Pacific at Cushman & Wakefield, said: “We are expecting rents to go up across the board on the back of very solid demand.

“We’re not going to see the spikes we’ve seen in the 2007-2008 time frame, where rents went as high as S$18-S$19 a foot.”

The report showed that all the CBD submarkets saw average rents appreciate, with Marina Bay and Shenton Way seeing a 9 per cent rise in rents. In the fringe area, Orchard Road’s average rents moved up by around 4.6 per cent quarter-on-quarter.

The average rent in the suburban submarket rose slightly — by 1.3 per cent quarter-on-quarter — to S$5.64 psf per month.

Vacancy rates for Grade A office space is also improving — dropping to 3.7 per cent in the second quarter from 5.0 per cent in the first quarter.

Vacancies at Marina Bay shrank to 3.6 per cent in Q2, from 5.6 per cent a quarter ago and 12.1 per cent a year ago. Raffles Place had an overall vacancy rate of 5.5 per cent, while Shenton Way’s vacancy rate stood at 4.9 per cent.

Experts said diversity in the tenant pool has helped fill the office space.

“Long gone are purely financial institutions,” said Desmond Sim, associate director of CBRE Research. “You have complimentary services like insurance, you’ve got legal all coming in to take up Grade A stock within Marina Bay and Raffles Place.”

Also helping the office rental market is the limited new supply coming to the market.

Mr Sim said: “This year, we have the Asia Square Tower II coming on stream. Next year, we have CapitaGreen that will come on stream. Then we actually have a break of no Grade A product coming in 2015.

“So if someone is trying to take advantage of the current low Grade A rents, they might realize the Grade A stock coming online is quite limited.”

One place where vacancies are not falling is in the suburbs, where vacancies are expected to rise to over 8 per cent through 2014.

The suburban vacancy rate was 2.7 per cent in 2012, and is expected to rise to 6.0 per cent this year and hit 8.2 per cent in 2014.

Sigrid Zialcita said: “In the suburbs, we’re going to see some massive projects delivered and add space, but again we don’t think it’s a huge concern for the market because the take up we’ve seen has been brisk, and going forward we see very healthy leasing occurring in this properties.”

There will be more options, but not necessarily better prices, as experts said despite rising vacancies, rental rates in the suburbs will remain stable at around S$5.50 per square foot this year to 2014.

Source – CNA – 26 Jun 2013


OUE plans to invest in 2 retail malls in CBD

Developer Overseas Union Enterprise (OUE) is set to invest in excess of S$140 million on two retail mall projects in the central business district.

Among the plans, OUE will be developing a five-storey retail mall at the existing DBS Building at Shenton Way, according to a source close to the matter.

Built in 1975, DBS Building at Shenton Way will soon be home to a new shopping mall, spanning some 170,000 square feet.

According to a source familiar with the plans, OUE is expected to spend over S$100 million to build the new mall.

It is slated to open in mid-2014, and the mall will offer retail and F&B options as well as a supermarket.

Analysts said a retail development will support an increasing residential population in the downtown area.

Donald Han, special advisor, HSR, said: “On the size of 170,000 (square feet) you would probably expect rents on average of about S$13 – 16 per square foot. Because this is still a new market place, it certainly has more upturn, upside in the next two to three years especially when most of the residential and hotel components are fully in place.”

OUE acquired DBS Building in 2010 for about S$871 million. The podium level will be converted to a shopping mall, but it appears that the developer is keeping the two office towers and it is currently looking for tenants.

Existing anchor tenant DBS Bank is expected to move out of both office towers by year-end.

And it is likely that OUE could see some rental upside when it leases the office space to new tenants.

Apart from the developments along Shenton Way, Channel NewsAsia understands that OUE will also refurbish the shopping mall at One Raffles Place.

Renovation work could start at the end of the year and it is expected to cost over S$40 million.

Source : Channel NewsAsia – 30 Jul 2012