Office space prices up, but retail space prices soften slightly in Q3: URA

Office space prices up, but retail space prices soften slightly in Q3: URA

In the past three months, vacancy rates for office space declined, but the opposite was true for retail space, the Urban Redevelopment Authority said on Friday (Oct 24).

SINGAPORE: Prices of office space increased by 1.6 per cent in the third quarter of the year, while rental prices of office space rose 2.6 per cent in the same period, the Urban Redevelopment Authority (URA) said on Friday (Oct 24).

In the same period, the vacancy rate of office space fell to 8.4 per cent, compared to 9.6 per cent at the end of the second quarter. The URA said that this was in part due to a 47,000sqm decrease in the stock of office space in the third quarter, compared with a 1,000sqm decrease three months prior. It was the largest quarterly decline since 1992, according to consultancy Knight Frank.

Occupancy rate remained healthy at 91.6 per cent in the third quarter. The amount of occupied office space increased by 50,000sqm (nett) in the third quarter, compared to the 22,000sqm (nett) increase in the previous quarter, the URA said.

RETAIL PRICES DIP

Prices of retail space declined by 0.2 per cent in the third quarter, following on a decline of 0.3 per cent in the previous three months. The increase of rental rates of retail space also slowed, rising by 0.1 per cent in the past three months, compared to the 0.6 per cent increase in the second quarter of the year.

The amount of occupied retail space increased by 15,000sqm (nett) in the third quarter, while the stock of retail space increased by 52,000sqm (nett) in the same period. As a result, the islandwide vacancy rate of retail space rose to 6.5 per cent at the end of third quarter, up from 5.9 per cent as of end-June.

Knight Frank said the islandwide occupancy rate of 93.5 percent in the third quarter was the lowest since the first quarter of 2011.

Analysts said retail rents could face downward pressure next year. Chestertons’ managing director, Mr Donald Han, noted: "Moving into 2015, we expect rentals to come under pressure mainly because tenants are more worried about their bottomline, more concerned about overall operating cost and labour cost, and we expect margins to be affected.

“Retailers are probably unable to pay higher rents come renewal. We probably will see rentals correcting 1, 2 per cent, but those development that are in the Grade A, prime retail malls will probably not see too much reduction in terms of rental."

OFFICE RENTS

CBRE Research said the average rent for Grade A office buildings in Singapore is S$10.95 per square foot per month, which is still some way off its record high.

Mr Desmond Sim, head of research for Southeast Asia at CBRE Research, elaborated: “The previous peak was in 2008 and we are likely 9.3 per cent off that peak. In our forecast, we do not see rents start to match that peak. At that time, GDP was doing relatively well, 6 to 8 per cent.

“What we see now is that GDP is pretty much controlled. Demand from financial institutions is also very limited."

NON-FINANCIAL SECTORS TO DRIVE DEMAND FOR OFFICE SPACE

Looking ahead, analysts expect non-financial sectors to continue to drive demand for office space. But they said some banks may be looking for room to grow, especially if they see substantial growth in the wealth management and renminbi clearing business.

Office rents have already gone up by over 7 per cent in the first three quarters of this year. For the whole of 2014, office rents are likely to increase 10 per cent, and analysts expect a similar pace of growth in 2015, with most of the rental growth seen in the first half of next year.

Meanwhile, office supply will remain tight next year, before new buildings like Marina One are completed in 2016.

INDUSTRIAL SPACE SEGMENT MOST CHALLENGING

Analysts said the industrial space segment will probably be most challenging - when compared with retail and office. Latest numbers from JTC showed growing weakness in multiple-user factory space, with prices falling 1.8 per cent on-quarter in the third quarter.

Knight Frank said: "Going forward, price depreciation for factory space is likely to continue in the coming quarters with the high supply of both factory and warehouse spaces. Demand for strata-titled factory units is likely to be reduced in the short-term, with the market's general expectation of further price moderations in light of the cautious manufacturing sentiment.

“We view that the rents would continue its decline in the coming quarters well into early next year. While this trend would pose greater challenges for the landlords, this would potentially benefit SMEs (small and medium enterprises) who are eager to have find industrial space at more available locations."

- CNA/es/ms

- wong chee tat :)

Singapore's office rental market expected to go up

Singapore's office rental market expected to go up

    By Toni Waterman
    POSTED: 26 Jun 2013 11:24 PM
  
Singapore's office rental market is on the rebound after bottoming out in the last quarter of 2012, according to Cushman & Wakefield.

SINGAPORE: 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.

- CNA/al

- wong chee tat :)

Marina One set to raise bar for future integrated developments

Marina One set to raise bar for future integrated developments
By Saifulbahri Ismail | Posted: 19 February 2013 1515 hrs
     
SINGAPORE: The Marina One mixed-use development in the heart of Singapore's Central Business District (CBD) will be a coveted business and lifestyle destination that will raise the bar for integrated developments and act as a catalyst to attract and grow new businesses.

That is the vision of M+S, a joint venture company owned by Malaysia's Khazanah Holdings Bhd and Singapore's Temasek Holdings, that is working on the landmark project.

M+S also said Marina One, designed by world renowned architect Christoph Ingenhoven, marks a brand new chapter in the Marina Bay Masterplan.

Its design was unveiled on Tuesday by Singapore's Prime Minister Lee Hsien Loong and his Malaysian counterpart, Mr Najib Razak, who are holding their Leaders' Retreat.

M+S said Marina One will be completed in 2017, with a gross floor area of 3.67 million square feet and is valued at S$7 billion.

It consists of Marina One Residences, Marina One Offices as well as a retail podium.

Marina One Residences comprises two towers of 1,042 luxury city residences, ranging from one- to four- bedroom units, including penthouses. These will be launched in the second half of the year.

Marina One Offices -- with east and west towers -- offer 1.88 million square feet of prime office space.

Its crown jewels will be two 100,000 square feet office floor plates, one of the largest in Asia.

Marina One will also have a retail podium called The Heart, which will also serve as a sanctuary and green space.

The development will also incorporate a unique garden ecosystem by landscape architect Gustafson Porter, best known for their world-class design of Singapore's Bay East, Gardens by the Bay.

PM Lee said he is happy to see the bricks and mortar starting to come up on site.

He added: "It's going to be an iconic project in the middle of our new business district for many, many more years to come. This is a project that both countries will be proud of and which will thrive and prosper in our city and friendship."

Mr Najib said he is excited to see the design for himself.

"I think it's a wonderful design. I think we have a real winner in this Marina One and it will certainly fulfil our expectations... A landmark, an iconic building and what we see today is the beginning of that iconic building," he added.

The two leaders were also briefed on the progress of the other joint project located near Kampong Glam.

The project, called DUO, includes office, residential and hotel components.

It sits on 160,000 square metres of land and is valued at S$4 billion.

The DUO and Marina One are part of six land parcels jointly developed by Singapore and Malaysia under a land swop deal agreed on in 2010.


- CNA/al/sf/ir

- wong chee tat :)