Do you need Rental insurance? | Jorbb.com

Jardine Lloyd Thompson and QBE Insurance Group will launch a rent protection insurance policy aimed at protecting landlords of private homes and HDB flats.

The timing of this first-of-its-kind product in Singapore is perfect given rising instances of early terminations as global economic conditions worsen.

'This is something you can find in Australia. We talked about offering it here a year ago and it is now ready,' said Institute of Estate Agents (IEA) president Jeff Foo. 'From feedback gathered from our members, there are more people breaking their leases early this downturn compared with the previous downturn. Landlords are not really protected.'

Landlords can buy the insurance, endorsed by the IEA, from their agents.

Details are a bit hazy at the moment as feedback on the product is still being gathered and tweaks may be made.

Basically, the insurance - for a lease of at least 12 months - protects against a loss of rent under certain circumstances, such as rental default and the tenant absconding.

The premium will be fixed at a certain percentage of a month's rent, for instance at 15per cent. And there will be a deductible period, which means the insurance kicks in only after a certain period of zero rental income for the landlord.

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Singapore developer says office demand plunged | Jorbb.com

CapitaLand Ltd, Southeast Asia's largest property developer, said demand for Singapore office space plummeted last year as the global financial crisis knocked the city-state into recession.

"There was a big surge in demand for offices 10 or 11 months ago ... but it suddenly stops and falls off a cliff," CapitaLand Chief Executive Liew Mun Leong said at a news conference. "We know the market is softening and volume has gone down, and prices will be softening."

The company's fourth quarter profit fell 88 percent to 78 million Singapore dollars ($52.2 million) from SG$675 million a year earlier, Liew said. CapitaLand also plans to raise SG$1.84 billion by selling one new share for every two held by investors.

Singapore's real estate market is reeling from a deep recession and job losses in the financial industry, which helps support demand for the country's most expensive residential and commercial property. The economy contracted 17 percent in the fourth quarter from the previous quarter.

Property prices rocketed between 2005 and 2007, luring some investors looking for a quick buck with speculative purchases. Private home prices surged 31 percent in 2007 as the economy expanded 7.7 percent.

Last year, prices fell 4.7 percent and economic growth slowed to 1.2 percent. The government expects gross domestic product to shrink as much as 5 percent this year.

"This was a classic property market bubble," said Tim Murphy, managing director of Hong Kong-based property investment company IP Global. "By the end, you had taxi drivers trying to double their money in 10 minutes. That only leads to one thing — a crash."

The government said last month that prices of private residential property dropped 6.1 percent in the fourth quarter from the previous quarter, their steepest fall in a decade, and office rentals fell 6.5 percent.

High-end residential and commercial property will likely fall between 15 percent and 20 percent in the first half and remain flat in the second as a deepening global economic slowdown undermines consumer confidence, Murphy said.

"With the data that's coming out, I can't see anyone in Singapore who reads a newspaper being confident enough to buy real estate," he said. "People have been too frightened."

Liew declined to say how much he expected property prices to fall this year.

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Retail rents expected to fall in 2009 | Jorbb.com

Retailers likely to be cautious in expansion, rents may undergo corrections to reflect the gloomy outlook

RENTS for prime retail space in Orchard Road could fall by as much as 13 per cent in 2009, while rentals at suburban malls are expected to ease by about 3 per cent, property analysts here said.

Cuts in consumer spending will be the key threat to rental rates. But rents will also come under pressure from the 3.2 million square feet of new retail space expected to come onstream next year - close to half of which will be along Orchard Road.

A poll of property analysts here showed that they expect prime retail rents to fall by anywhere between 5 and 13 per cent next year. But malls in the suburbs, where people go to buy their neccessities, are expected to fare better. Predictions for suburban rental growth range from ‘holding steady’ to a decline of up to 7 per cent. The consensus view is a fall of about 3 per cent.

By contrast, so far in 2008, prime Orchard Road rents fell 0.8 per cent year-on-year, while prime suburban rents rose one per cent, data from CB Richard Ellis (CBRE) shows.

Consumers are expected to cut back on spending on concerns of job and wage security, which will hit the sales of retailers, analysts said. Tourist arrivals are also expected to fall, which will depress sales further.

‘A prolonged depression in consumer spending could affect retailers’ ability to service their rents and we think it is possible that more retailers would renegotiate for lower rental rates, and retail mall managers may have to give in to avoid a high turnover in tenants,’ noted OCBC Investment Research analysts Foo Sze Ming and Meenal Kumar in a report.

Echoed Knight Frank: ‘Retailers will be more cautious in expanding their businesses and retail rents are likely to undergo corrections to reflect the gloomy outlook.’

In addition, more space is due to come onstream - some 5.7 million sq ft in the next two years. Of this, 20-30 per cent will be located along the Orchard Road belt. Another 21 per cent will come from the Marina Bay Sands resort. Some of the major retail supply due to be completed next year include Ion Orchard, The Marina Bay Sands Shoppes, Orchard Central, 313@Somerset and City Square Mall.

But in spite of all the new space, analysts here remain confident that the healthy take-up of retail space seen so far is likely to keep vacancy rates under control and prevent sharp rental declines caused by oversupply.

Most of the major upcoming malls - such as Ion Orchard, Orchard Central, Mandarin Gallery, 313@Somerset and Marina Bay Shoppes - have reportedly achieved pre-commitment rates of between 50 per cent and 70 per cent, said Colliers’ director for research and advisory Tay Huey Ying. And there should be interest for the remaining retail space, she said. The Orchard Road malls will ‘probably be the only new retail malls the market is likely to see on this prime stretch for a while’ and the Marina Bay Shoppes ’should also be sought after as the locality would be a new icon for Singapore’, Ms Tay said. ‘The challenge, therefore, is really in structuring a rental package that is win-win for both landlord and retailer in an increasingly trying time,’ she added.

Other analysts agreed, saying that the onus will be on landlords in 2009.

‘Prime properties will still be able to attract tenants, but developers must be more flexible with rental expectations,’ said Anna Lee, DTZ’s associate director for retail. ‘As consumers hold their purses tighter, landlords would have to spend more on advertising and promotion to entice more consumer traffic to their malls and translate that into spending.’ And to mitigate lower sales faced by their tenants, some landlords may offer rental rebates and lower turnover rents, she added.

Analysts also said that capital values are expected to remain steady in the retail sector. ‘Of note is that the retail sector remains defensive even during the Asian Crisis period, with rental rates and capital values remaining fairly stable during this period. Hence, we believe that a fair cap rate for the retail sector would remain in the 5-6 per cent range,’ said DBS Group Research analysts Mun Yee Lock and Derek Tan.

Source : Business Times - 27 Dec 2008

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Grade A office vacancy doubles to 1.2% in Q3

GRADE A office vacancy has doubled in the third quarter of 2008, rising from 0.6 per cent in the previous quarter to the current 1.2 per cent.

This is also the first time in eight quarters since Q3 2006 that Grade A office vacancy has risen above the one per cent mark.

CB Richard Ellis (CBRE) says market fundamentals have changed and sentiments have ‘deteriorated’ with pre-commitment rent levels likely to come under pressure.

CBRE executive director Moray Armstrong added: ‘There is an increase in vacancy as certain occupiers have relocated to less expensive cost options in lower grade and, or, decentralised locations.’

According to CBRE, office rents have also plateaued with both Grade A and prime office rents remaining static at $18.80 per square foot per month (psf pm) and $16.10 psf pm respectively.

CBRE had earlier anticipated rents would only soften beyond 2010. But with the events of the past few weeks, it now believes that the correction will be fast- forwarded to early 2009.

‘Landlords are adopting more reasonable asking rents, although in the immediate term occupiers will still face rentals that are at all-time highs. We will continue to monitor the trend over the next few months to see how swiftly the fast approaching new office supply allied with slowing demand will combine to bring down rents from today’s levels,’ added Mr Armstrong.

There were increases in vacancy rates for most micromarkets in the third quarter of 2008 - with the exception being Orchard Road, which saw a one percentage point drop in vacancy due to higher occupancy at the newly completed Visioncrest and at StarHub Centre.

Mr Armstrong said that occupiers are ‘understandably cautious’ given the challenging financial and economic environment, but he pointed out that a number of recently announced pre-commitments demonstrate that there is underlying confidence in Singapore’s relative position.

Still, he noted that many occupiers are also chasing lower costs and are relocating to decentralised locations, built-to-suit facilities and business park space.

CBRE estimates the confirmed new office supply over the next five years is now slightly higher at 10.64 million sq ft.

CBRE said the increase stemmed from increases in proposed net lettable area from developments under construction.

‘We do not consider this volume of supply excessive based on our estimated average annual demand of 1.6 million sq ft,’ said Mr Armstrong, highlighting that about 26 per cent of the new supply has already been pre-committed.

Mr Armstrong explained that the 1.6 million sq ft demand figure represents its projected five-year average office take-up level over the period 2008-2012.

He believes that this figure represents a realistic take-up figure that has factored in lower GDP going forward.

By comparison the past three-year average office take-up level was just under 2.2 million sq ft.

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Singapore in for ‘biggest office space excess in 20 years’

DEMAND for Singapore offices is likely to fall to recession-level lows next year and in 2010, resulting in the biggest excess supply of office space in 20 years, said Credit Suisse yesterday.

It expects office vacancy rates to hit a high of 16.5 per cent in 2010 - up from an islandwide vacancy of about 2 per cent currently - as firms’ expansion plans are hit by the global financial turbulence.

Office rentals are also predicted to peak earlier than expected this year, and fall 50 per cent by 2011, said research analyst Shirley Wong, who has downgraded the Singapore office trusts sector to underweight.

After her report was released, office trusts CapitaCommercial Trust (CCT) and Suntec Reit saw large drops in their unit prices that put them among the worst-performing property stocks yesterday. Property counters fell across the board as the wider stock market faltered.

CCT fell 17 cents to its lowest level in almost four years, while Wing Tai and Keppel Land each dropped more than 6 per cent to three-year lows.

‘Focus of the office sector has always been on supply, but actual demand is hurting, and repercussions from the US economic shocks could strain it further,’ Ms Wong said in the report. Tenants are resisting rent rises, while capital values have been flat for three quarters and vacancies have risen for two quarters.

But not all analysts are as bearish.

The supply of offices in the pipeline could be affected by construction delays, while property market sentiment and prices may start picking up at the end of next year when the integrated resorts take shape, said Kim Eng analyst Wilson Liew.

‘I do not foresee drastic cuts in the headcounts of financial institutions in the Asia-Pacific and, in fact, the private banking sector may provide some support.’

But Mr Liew conceded that the looming imbalance caused by more supply and less demand will ultimately lead to lower office rentals. He expects a moderate decline in rents of 10 to 15 per cent between now and the end of next year.

More broadly, property developers may soon be forced to write down their assets as real estate prices fall around the world, said another Credit Suisse research analyst in a separate report.

Developers were holding out for a recovery in sentiment, but ‘a confidence crisis from the recent near-collapse of global financial markets could hasten and steepen price falls’, said Ms Tricia Song.

Catalysts include the large upcoming supply of homes, a slower expatriate influx, potential job losses, and delays to the completion of the integrated resorts.

Ms Song noted that major write-downs in previous property downturns triggered developers’ stocks to plunge as much as 79 per cent in 1998 and up to 50 per cent in 2001.

‘CapitaLand and Keppel Land wrote down the most and could do so again due to aggressive acquisitions and revaluation gains in recent years,’ she added.

The only major property counters spared yesterday’s carnage were GuocoLand, up one cent at $1.85; CapitaMall Trust, up six cents at $2.31; and Bukit Sembawang, up 10 cents at $6.30.

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Grade A office rents in CBD slide for first time in years

Average monthly rent at Raffles Place slips 1.4% to $17.64 psf in Q3

GRADE A office rents in Singapore’s Central Business District (CBD) have declined for the first time since the office market troughed in 2004.

The average gross monthly Grade A rental value for the Raffles Place area slipped 1.4 per cent to $17.64 per square foot (psf) in the third quarter, from $17.89 psf in the preceding quarter, according to the latest data from Knight Frank.

The Suntec/Marina Centre/City Hall area led the declines in Grade A office rentals in Q3, with a 6.2 per cent quarter-on-quarter fall to $15.13 psf. In the Shenton Way/ Robinson Rd/Tanjong Pagar area, the drop was 2.8 per cent, followed by a 2.7 per cent decline along Orchard Road.

Knight Frank director (research and consultancy) Nicholas Mak said that he expects office rentals to continue declining by 14-19 per cent islandwide in the next 12 months (from current levels) as the global financial turmoil and possible mergers and acquisitions contribute to consolidation and reduction in office demand.

Giving her take on weakening office demand, DTZ executive director Ong Choon Fah said: ‘Most companies are in cost containment mode and would be looking for ways to manage the increase in their accommodation costs. There has also been quite a lot of leakage of CBD office demand to business parks and vacant state properties converted to offices.’

Mrs Ong reckoned that headline office rents may not come down much but noted that leasing incentives like rent-free periods have started to reappear. Agreeing, an analyst said: ‘Major landlords will try to maintain headline rents, because once rents come down, it affects their whole portfolio.’

Besides weaker demand for office space amid the financial turmoil, Knight Frank’s Mr Mak attributed the softening rentals in Q3 to the government’s efforts to increase office supply (including transitional office sites). ‘In addition, landlords are more cognisant of the substantial supply of office space that will be completed from 2010 and have become more realistic and flexible in their rental expectation when it comes to lease negotiations; they want to hold on to their tenants and maintain their buildings’ occupancy rates,’ Mr Mak said.

The fall in the average Grade A Raffles Place rental value in Q3 marks the first quarterly decline since Q2 2004. This incipient weakening follows a rapid escalation in office rentals over the past two years on the back of tightening supply and strong demand from occupiers, including global financial institutions expanding their operations in Singapore. Average Grade A Raffles Place rents surged 82 per cent last year and that was on top of the 67 per cent gain posted in 2006, according to Knight Frank.

But it’s a different story now. ‘Since Q1 2008, there appears to be a crack in the growth momentum for office demand in the Downtown Core area due to external factors such as the US sub-prime crisis that began in the second half of last year,’ said Mr Mak.

The slowdown in demand in the Downtown Core area - which includes the key office districts like Raffles Place/Marina Bay, Shenton Way and Marina Centre - and tapering off in rentals in Q3 does not come as a surprise, he adds. ‘The tenants in this area are primarily financial institutions, many of which had already completed their expansion or consolidation plans over the last 24 months and some are adopting a more cautious approach by putting any further expansion plans on hold,’ Mr Mak observed.

Knight Frank’s data showed that Grade B offices in Singapore also experienced downward pressure on rentals in Q3. The biggest fall was in the Orchard Road location, where the average rent decreased 7.8 per cent quarter-on-quarter to $10.70 psf a month in Q3. Raffles Place and Shenton Way/ Robinson Rd/Tanjong Pagar Grade B offices were less impacted by easing office rentals and dipped by 1.8 per cent and 2 per cent quarter-on-quarter respectively.

As a whole, offices in non-CBD locations also mirrored the general slowdown in rental in Q3. Rentals continued to weaken for the Beach Road/Middle Road area, with a 3.4 per cent quarter-on-quarter drop. Suburban areas too met a similar fate with quarter-on-quarter rental decreases ranging from 1-8 per cent.

Looking ahead, Knight Frank said that in the short term, the beleaguered financial markets are expected to lead to many firms either postponing their expansion plans or consolidating their space usage. Restructuring at some organisations could lead to sub-letting of excess space to ease cashflow problems.

Source : Business Times - 29 Sep 2008

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Grade A office rents to be hit amid uncertainty in financial sector

The collapse of Lehman Brothers is set to hit Asian office rental rates.

Banks are traditionally the largest users of Grade A office space in the region, and they are likely to cut back on expansion plans and even consolidate current operations in the year ahead.

In the region’s major office markets, Tokyo’s prime rentals are leading the decline.

Others are expected to follow suit over the next 12 to 18 months.

In Tokyo, the cost of each tsubo - or 3.3 square metres - of office space fell for the first time in 35 months in July.

And office rents in similar financial hubs like Hong Kong, Shanghai, and Singapore are likely to go down this road, as the banking industry continues to stumble in this uncertain period.

Colin Tan, Head of Research and Consultancy, Chesterton, said: “There may be more mergers and some banks may actually fold up. And I think this (would have an impact) in the sense that banks are usually the largest user of office space.”

Rental cycles across the region have already been peaking in key cities.

And analysts said a larger-than-expected fall in demand will exacerbate declines.

Grade A office rents in Singapore have fallen from a peak of about S$18 per square foot per month to about S$14. And analysts said it is likely to fall further to S$10 in 2010, which is when the first phase of the Marina Bay Financial Centre is expected to be completed.

Meanwhile, Merrill Lynch analysts expect rents to fall to S$8 by 2011.

Donald Hang, managing director, Cushman & Wakefield, said: “We will probably see developers and landlords trying to activate tenancies on a quicker basis rather than a delayed basis. Last year, a vacant space (would have seen) a rental increase of 5 to 6 per cent, which is why rents went up almost double. But this year, rentals have peaked; it pays to get the premises let out rather than keep it vacant.”

This means companies can expect a tenant’s market ahead.

And with the major support for office space demand weakened, analysts said local firms will be the ones keeping the market afloat.

Mr Han said: “If we look at the last six months, if you asked me the same question, I will be looking into the continued growth in the financial, services sector. But with the recent bankruptcy news we have seen from the US, I think the growth from the financial sector will probably be muted for the time being. And the continued growth…will be more focused on local companies.

“For instance, in Japan and China, we see more Japanese and Chinese corporates looking to consolidate their offices under one building.”

US office REITs in the centre of the storm took a dive on Monday before recovering slightly over the past few days.

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50% of retail space leased at Fusionopolis

As the first phase of Fusionopolis approaches its official opening next month, more than 50 per cent of retail space in the development has been taken up.

The upcoming research and development (R&D) hotspot, comprising two towers and a podium in phase one, has around 183,000 sq ft of retail space. With seven tenants already secured, some 86,100 sq ft are left.

Cold Storage and Fitness First are two of the largest tenants. Fitness First @ Fusionopolis, with a rooftop swimming pool, will occupy 30,000 sq ft. According to JTC Corporation, the fitness club’s members have been able to use the facilities starting yesterday.

Starbucks Coffee, Harry’s Bistro & Bar, food and beverage (F&B) outlet Black Canyon, Raffles Medical Group and Frames & Lenses (Optical) will also be moving into the first phase of Fusionopolis.

Rents for the retail space range from $4.50 to $12 per sq ft, depending on how the units are used. Larger units also enjoy a lower psf rent.

‘We are heartened by the enthusiastic response from our business partners in locating their retail and F&B outlets at Fusionopolis,’ said JTC Corp’s assistant CEO, Philip Su.

‘It is an endorsement of what the vibrant Fusionopolis stands for, as the first integrated development within one-north which embraces all four work-live-play-learn elements.’

Frasers Hospitality will also be launching its brand of serviced apartments in Fusionopolis, comprising 50 work loft units.

JTC Corp is in talks with more retail and F&B businesses to take up the remaining space. ‘We welcome all other like-minded and enterprising business partners to join us in realising the vision of this unique innovative hub,’ said Mr Su.

Fusionopolis is a major development at one-north catering to the infocomm, media, science and engineering industries. The first phase has around 1.29 million sq ft of floor space and major R&D tenants include institutes and laboratories under A*Star’s science and engineering research council.

Phases 2A and 2B of the Fusionopolis are likely to be completed by 2010.

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Singapore office occupancy costs 7th highest worldwide: survey

Grade A office space in Singapore was the seventh most expensive in the world in June this year, a survey has found.

The average annual Grade A office gross rent here was US$125.06, according to the study by Colliers International.

Cities that were dearer included Hong Kong (US$213.68), London’s West End (US$207.42) and Moscow (US$167.29).

Singapore was the third most expensive location in the Asia-Pacific region, after Hong Kong and Tokyo.

In its Global Office Real Estate Review Midyear 2008, Colliers says average annual Grade A office rent in Singapore soared to US$113.49 in December 2007, from US$84.64 in June 2007.

In terms of vacancy rates, Singapore at 7.5 per cent in June 2008 ranked 13th in the Asia-Pacific, below the likes of Perth (0.3 per cent), Seoul (0.7 per cent) and Brisbane (1.2 per cent).

While the vacancy rate here rose marginally from 6.1 per cent in December 2007, Collier’s director of research and advisory Tay Huey Ying said: ‘Singapore registered a comparatively higher vacancy rate in the first six months of this year. This was due in part to the government providing relief to the supply shortage by leasing out some disused state properties and selling several sites for transitional office use.’

Companies appear to be increasingly receptive to alternative business locations and premises, Ms Tay said.

‘Office users, who have had to grapple with the frenzied pace of rental growth experienced since mid- 2006, can heave a sigh of relief as rental growth eased substantially in the first half of 2008 on the back of reduced pressure on supply,’ she said.

In terms of supply, Colliers said Singapore had 8.6 million sq ft of offices under construction in June, putting it in 16th position below cities like Dubai (42 million sq ft), Shanghai (41.6 million sq ft) and Guangzhou (19.8 million sq ft).

Office investment held up in the Asia-Pacific but was down in Europe and North America.

Global office investment fell 60 per cent - or 41 per cent excluding portfolio sales - in the first half of 2008 to $108 billion, from $268.6 billion a year earlier.

But Japan saw office transactions increase 103 per cent, followed by Hong Kong (up 86 per cent) and Singapore (up 58 per cent). China registered a drop of 16 per cent.

Capitalisation rates / initial yield in Tokyo (Central Wards), Hong Kong and Singapore were 3.9, 3.42 and 6.19 per cent respectively.

In Spain and The Netherlands, office transactions increased 77 per cent and 14 per cent respectively, while in London they fell 64 per cent.

The US remained the most active office investment sales market, even though volume dropped 69 per cent to US$28.6 billion.

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Slow demand for office space hits rents

SINGAPORE’S booming office market is facing a drop in demand and a slowdown in rents that have left many wondering: What happens next, when a host of new developments are launched?

Citigroup estimates that rents could fall 30% to 35% by 2011 as a host of new office buildings are expected to be ready for occupancy.

TodayOnline has more.

Image Source Bloomberg.
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5th Most Expensive City in Asia - Singapore

Singapore is now the fifth most expensive city in Asia, according to Mercer Worldwide Cost of Living Survey.

In Asia, the cost of international-standard accommodation has pushed some cities up the ranking. For example, sharp increases in house prices have contributed to Singapore climbing from 17th to 14th position. Rising property prices have also caused Indian cities to move up the ranking – for example, Mumbai has jumped from position 68 to 52 (score 84.9).

Singapore’s rise in rankings is partly due to the appreciation of the Singapore dollar against the US dollar.

Other contributing factors include its high quality of living and continued strength as a regional hub.

Tokyo is the costliest Asian city, followed by Seoul, Hong Kong and Osaka.

In world standings, Singapore is in 14th position.

Moscow was ranked the most expensive city both in Europe and globally for the third year running.

Mercer’s survey covered 143 countries across six continents. - CNA/de

Source ChannelNewsAsia and FinFacts.ie
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"It's a bit like living in Disneyland..."

That's a comment from an expatriate on GeoExpat.com when discussing living in Singapore versus Hong Kong and many Singaporeans apparently agree. According to AsiaOne, they are being lured to work in Hong Kong by higher salaries, livelier business action and "grittiness". Singapore feels sterile to some.

10,000 Singaporeans live and work in Hong Kong in all business areas, feeling that more high-level business transactions take place there, allowing them to add more impressive projects to their CV. One of the reasons that Hong Kong is seen as more impressive place to work is it's proximity to China where business growth has been unprecendented.

Hong Kong's salaries are higher as well. Foreign workers from places like the US and UK seem to agree, although acknowledge that Singapore is a friendlier, safer place to live. They do note, however, that it is much more expensive to live in Singapore.
Singaporeans from all different business sectors work in HK, including financial and IT and find they have more responsibility in HK than in Singapore. Singapore businesses, particularly in banking, are attempting sucessfully to close the salary gap between the two destinations.

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Singapore's real estate market potentially concerning

Despite world economic concerns, Singapore's real estate market has been strong and, thus far, that continues to be true. It's estimated that housing prices will rise 5-10 per cent this year. Singapore has virtually no unemployment to speak of (2%) and for most of the real estate markets, this is contributing to stability. But luxury housing is an area of concern.

Bloomberg.com's Andy Mukherjee reports that the issue is counting on investors who usually seek out premium or "iconic" properties to invest in. Prices are down in this market and foreign investors are reducing the number of units they are buying. Additionally, rental yields are down which, again, inhibits investors from putting as much of their money into real estate in Singapore. There is concern that the need for foreign workers may stall which will directly impact rental returns.

The good news is that Singapore is still an attractive, vibrant place to live and invest in real estate. Loan rates are low, job opportunities high and as long as developers continue to build affordable housing, a real crisis can probably be averted.

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Retail Rents In Singapore Stabilising

Positive consumer sentiment and the Great Singapore Sale have provided some support for the retail property market in Singapore, according to property consultants DTZ.

It said given the general uncertain global outlook, tenants have resisted committing to higher rents, and this has kept the retail sector stable during the second quarter.

Going forward, analysts said they see at most a marginal increase of 2 to 3 per cent in rents for the rest of this year.

Cushman & Wakefield noted that there is little risk of oversupply as international retailers clamour for a piece of the Singapore market.

And although inflation may dampen domestic consumer spending, analysts said external demand from strong tourist arrivals is likely to offset that.

Mr Han said: "Into the next six months with the F1 arriving in September, we'll only see a higher number of tourists on shore, which will effectively see higher tourism receipts, (a) positive spillover in spite of high inflation numbers over the next six months or so."

With more malls fighting over the same tourism dollar, analysts said malls are starting to work harder to attract customers.

Analysts also said there is no fear that the Orchard belt will cannibalise suburban malls, as they serve different markets.

Source PropertyHighlightsSingapore via ChannelNewsAsia
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Business Park Occupancy Rates at 88% - May Hit New High

Business parks are set to see occupancy rates go beyond 90 per cent by the end of June this year to hit a new peak, according to property consultants CB Richard Ellis (CBRE).

At the end of March, the average occupancy rate for business parks stood at about 88 per cent.

CBRE said office space shortage and persistent rent increases are driving office tenants towards hi-tech space or business parks.

This has pushed up business park rents by an average of 30 per cent since the start of the year.

During the second quarter, two business park sites at one-north were awarded, which will add over 90,000 square metres of space by the end of 2009.

Source ChannelNewsAsia.
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Office rents going up, but not for long

Singapore office rents will climb another 10% for the remainder of 2008, but vacancies are going to surge in the years following that due to extensive building projects being completed. Vacancies are expected to stabilise by 2012. This is reported by Deutsche Bank’s property arm RREEF who also notes that of all commercial rentals (retail, industrial and office), office rentals are the most volatile. Retail is expected to see continued growth for the next four years.

Major projects in the completion stages this year include Marina Bay Financial Centre (MBFC), Ocean Building and Marina View.

Image Source HKLand

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Office property market slowing in Q2

DTZ reports at the average office occupancy rate for the second quarter of this year saw a dip of 0.2 percentage point.

Office rental prices have also been flat - suggesting that the market is resistant to rising prices.

It said the slide was spurred by tenants seeking cheaper locations when their leases expired.

The report showed that businesses have been looking to alternative locations like business parks, and temporary office locations to tide them over until new office locations open up in 2010. At the moment, business park rentals cost about half, or a third of what can be found in the CBD.

Some companies may find it more cost-effective to stay in these alternative locations, but DTZ believes there will still be demand when the new supply comes on-stream.

Source DTZ via Channelnewsasia.
Image Source via Channelnewsasia.
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Office Rents in Singapore - nearing peak

Straits Times today reported that CB Richard Ellis (CBRE) report said the impact of the United States sub-prime crisis, rising inflation in Singapore and more modest economic growth have dampened the office sector and slowed rent rises.

Rents of top office buildings rose 9.6 per cent in the first half compared with 96.5 per cent in the whole of last year. Such Grade A rents averaged $18.80 psf a month in the second quarter, up from $18.65 in the first period. The vacancy of Grade A space - now 0.6 per cent - will remain tight as no new top-grade office developments will be completed before the second half of next year.

While office rents may have peaked, they will probably stay at the current levels for the next 12 months given tight supply. And the search for lower-cost space continues. There is heightened interest for upcoming space in the Alexandra and Harbourfront areas.

There will be about 10.2 million sq ft of new space coming on stream between now and 2012, with the bulk likely to be ready in 2010 to 2011, said CBRE. About 63 per cent of this will be in Grade A properties in the core downtown area.

Still, the supply should be viewed in context with the strong take-up rate, said CBRE. About 22 per cent of known supply from now to 2012 has already been pre-committed.

Source PropertyHighlightsOfSingapore via Strait Times.
Image Source PYGMY.
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Office / Retail $5.2 billion 41% of year-to-date investment sales

Business Times reported today that total investment sales of Singapore real estate, a gauge of developers' and investors' medium- to long-term confidence in the property sector, have dipped to $3.7 billion so far this quarter (up to June 20), or 58 per cent lower than the Q1 2008 figure of $8.9 billion, according to figures compiled by CB Richard Ellis.

"We'll continue to see the sale of office, retail and industrial income-producing assets and possibly hotels during second-half 2008 but the volume will be lower (than the first half) because of a price mismatch between sellers and buyers."

With tighter bank financing these days, smaller office blocks and industrial or business park buildings costing $20-200 million each are in greater demand among funds. Industrial property is also more in favour now because it offers higher yields than offices and is a better match for these funds' lower risk appetite in the current climate.

Source Business Times via LushHomesOnline.

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Jorbb brings you (Office) Real Estate News

From today, Jorbb will bring you real estate news related to office properties (rental / buying & selling).

We feel that covering this topic may be helpful for start-ups / entrepreneurs looking to rent / buy their own office and investors looking to sell in this bullish market.

Pacific Star recently reported that for the office sector in Singapore, the current demand-supply imbalance is expected to support rents till 2009. Office demand is still firm with leasing agents lamenting the lack of available space rather than a lack of enquiries, although the number of enquiries would have fallen somewhat.’

But an above-normal supply of office space will put pressure on rents from 2010, even if growing demand from the services sector prevents any excessive correction, it said.

Full article in Business Times via LushHomeMedia Blog.

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