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6 Dec

Singapore still attracting Property Investors

With economic situations elsewhere in the world fluctuating and uncertain, property investors are looking to the stability of Singapore as a criteria for investment. Where are these investors willing to spend the money?

Singapore is regarded as the region’s most favourable market for commercial real estate next year despite a gloomy global economic outlook, according to a new report. It also noted that development capital here remains healthy, indicating continued investor confidence. ‘(Its top position is) largely due to the city’s continued transformation into a truly global city with a burgeoning asset and wealth management sector,’ the report added.

Wealthy investors are dipping into the commercial property market in Singapore. Image Courtesy of Singapore Tourism Board.

Singapore retains its popularity due to its ‘strong connections to the global economy, good governance and rational and relatively transparent development processes’, said Mr Patrick Phillips, chief executive of the Urban Land Institute, which compiled the report with PricewaterhouseCoopers (PwC). This is the second year running that Singapore, buoyed by strong immigration and tourism growth, has led the pack for investment prospects. Shanghai and Sydney are in second and third spot respectively, while Hong Kong has fallen out of the top 10 due to its ‘high-priced market with slim investment returns’.

But some participants in the survey, which covered 21 regional markets, say the sector in Singapore may have peaked. There are suggestions that investor returns will be hit by the large supply of Grade A office space in the pipeline and moderating rents. Investors are also getting cautious as Singapore is an open economy and sensitive to global volatility, said Mr Choo Eng Beng, PwC Singapore’s partner and real estate leader. But he also noted that market transparency is Singapore’s key strength, helping investors anticipate what might be coming – such as a possible oversupply – and factor it into their prices.

Vertex commercial building in Ubi.

The report also found that investors in the Asia-Pacific as a whole are increasingly returning to core investments, typically lower-risk projects with slower capital appreciation but solid cash flow. Domestic capital is also increasingly supporting the market, which bodes well for the region as it allows for a more sustainable and durable property market, Mr Phillips said.

However, the report acknowledged that the economic woes in the United States and Europe are weighing upon regional economies as well as investor sentiment in real estate markets. This will continue to put pressure on property pricing, transaction activity and financing. The report surveyed more than 360 real estate professionals in September and October.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
With Singapore still attracting property investors from all over the world, could demand for private homes continue to climb in the next few years?  Is Singapore’s housing for the benefit of only those with cash to spare?

3 Nov

iProperty Group launches CommercialAsia.com

Spearheaded by the iProperty Group, CommercialAsia.com will have over 150,000 listings and value-added services, including researches, reports and access to property experts

Shaun Di Gregorio at launch of CommercialAsia.com

Region-wide cooling measures by the government on the residential property sector and the rising yield in the commercial sector has prompted the launch of CommercialAsia.com, the region’s first comprehensive website dedicated to commercial and industrial properties across Asia-Pacific. The new website has the largest database of commercial and industrial property listings in the region with over 150,000 current listings, a figure expected to grow to over 500,000 by the end of 2012.

The growth potential of the commercial and industrial sector is expected to be in the range of 5% to 10% for 2012. More investors are looking into commercial and industrial property due to the lower cost and the higher return on investment and they may make 4% to 8% yields renting their premises.  If an investor were to have invested in one light industrial cum office building 4 to 5 years ago, the investor will see a yield of 18% to 23% return.[i]

Spearheaded by The iProperty group, currently Asia’s leading online property portal, which reaches out to 3.5million unique visitors and 25,000 real estate agents per month, the launch of CommerialAsia.com is timed in anticipation of the market trend. The Group, famed for its innovation, has also achieved number one status in Malaysia, Singapore, Hong Kong and Indonesia. The company analysed property searches and data from Singapore, Hong Kong, Malaysia and Indonesia over the last year to ascertain the level of interest in the commercial and industrial property industry.

Shaun Di Gregorio, CEO of The iProperty Group, said: “The iProperty Group’s data across Malaysia, Singapore, Hong Kong and Indonesia between 2010 and 2011 shows an upward trend in searches for commercial property. With the government introducing cooling measures across Asia-Pacific and the fear of possible recession in USA and Europe and assumption of that impacting Asia-Pacific, the residential sector is softening as investors adopt a ‘wait-and-see approach’. On the other hand, in the commercial and industrial sector, which is rarely governed by restrictive policies and has seen high yields maintained, there has been a steady gain in interest. The office sector is hot. There is shift in individual investors from residential to commercial and this number will increase. In India for example, the office yields are at 11% and the retail yields are at 13%. It makes the commercial and industrial sector especially exciting right now!”

CommercialAsia.com will help business owners and business managers make informed decisions more efficiently by providing them with an easy and convenient platform to locate business spaces across Asia-Pacific and by providing vital research and reports. It is the only website that provides a comprehensive list of office, industrial and retail properties across multiple sub-categories and countries. It also features special functions such as a currency converter and a robust search engine.

Following the launch of CommerialAsia.com, customers can continue to look forward to innovations and developments including translation services, a wealth of information on current trends and research, a directory of property agents and owners, pricing trends as well as a dedicated trade forum to reach out to property experts. A series of upcoming advancements in the portal will provide the commercial and industrial industry with the best tool to promote their properties across Asia-Pacific and will ensure that consumers benefit from the best search experience.

These enhanced services will be made possible by strategic partnerships with leading names in the sector, including LJ Hooker, Ray International Real Estate Group, Centaline Commercial, PropNex, Orange Tee, PropertyBank.

Mr Raymond Chow, CEO of Ray International Real Estate Group, said, “When arranging a partnership it is important to share a vision. The iProperty Group is not just in Singapore, it is global and as we all know, the commercial segment is in every country and is needed by everyone to run their business. To have a platform called ‘CommercialAsia’ shows that it is not just for Singapore but for Asia!”

Mr Di Gregorio said, “Given the growth in the industry, there is really a need for a single platform for the commercial and industrial property sector where potential investors can search for property, but also be able to make sense of trends and property news across Asia-Pacific. Being able to find everything they need in one place will certainly help them make more informed decisions.”

CommercialAsia.com is run by the The iProperty Group, Asia’s No.1 property group. For more information, visit www.commercialasia.com.

[i] Source: Ray International

23 Sep

Time to put the cool on property cooling measures?

Have all the locals gone into hiding as foreign buys take over Singapore’s property market? Could home prices that remained high despite cooling measures, and the cooling measures themselves, have contributed to this decline?

Singaporeans have bought far fewer homes so far this year compared with the figure in the same period last year. They have retreated from the market in droves as tough cooling measures and sky-high prices took a significant toll on buying demand.

Foreigners and PRs take well to properties near good schools. Seen here is Rafflesia, in Bishan.

But foreigners have apparently been less concerned about these factors. This has boosted their share of the non-landed housing pie to a record high of 33 per cent in the first eight months of this year. The figures emerged in an analysis of caveats lodged with the Urban Redevelopment Authority carried out by property consultancy Savills.

The 33 per cent figure is a marked rise from the 28 per cent market share held by overseas buyers for all of last year. Purchases by local buyers sank to a near-record low of just 65 per cent in the first eight months, down from 70 per cent for all of last year. Since 1995, the only other year with a lower proportion was 2007, when Singaporeans accounted for only 64 per cent of the market.

Singaporeans bought 11,254 apartments in both the primary and secondary markets this year. This is sharply down from the 15,947 units that were sold to local buyers in the same period last year. By comparison, purchases by foreigners, including permanent residents (PRs), held relatively firm at 5,803 in the first eight months of this year, down a whisker from 6,056 units in the same period last year. The remainder of the purchases were made by companies.

Miro condominium on Lincoln Road is near the Novena/Newton areas, at the fringe of the city and near some major offices.

Experts say the four rounds of government cooling measures – including tighter financing rules and a sellers’ stamp duty of up to 16 per cent – have sent local speculators scurrying from the market, with subsale volumes plunging about 25 per cent year-on-year. Some Singaporeans might also have been deterred by record prices, choosing instead to buy commercial and industrial space in their search for higher yields, the experts added.

But foreigners, especially PRs, remain active because Singapore is still viewed favourably for business, education, investment and as a place to live, said Mr Png Poh Soon, Knight Frank’s head of research and consultancy. ‘For foreign investors, the strong, stable Singdollar appeals to them as they seek to diversify their funds,’ he noted. Colliers International’s director of research and advisory, Ms Chia Siew Chuin, said tough cooling measures in mainland China and Hong Kong might also have diverted some buying interest to the market here. The flow of hot money from the troubled Western nations to the East has also played a part.

Singaporeans may have deferred their interest and focused instead on commercial and industrial properties. Seen here is the freehold commercial property, WIS@Changi.

‘Additionally, those with ample funds and looking for alternative investment avenues were diverted to non-residential segments as a result of the various measures,’ she added. ‘These include the strata-commercial and industrial markets, where buyers were encouraged by the comparatively smaller capital outlay required and higher returns expected from such properties.’

Record prices are also putting off Singaporeans more familiar with the cyclical nature of the market, some experts say. Mr Colin Tan, Chesterton Suntec International’s research head, said: ‘Because locals have been around long enough, they are more likely to feel that current high prices are unsustainable.’

Mr Alan Cheong, Savills’ research and consultancy associate director, agreed that the drop could be due to more Singaporeans holding back on purchases in anticipation of a price drop due to the onslaught of upcoming supply. On the landed front, local buyers accounted for 88 per cent of transactions, similar to the figure last year. Strict conditions apply to foreigners buying landed homes. They need permission from the Land Dealings (Approval) Unit before they can own landed property. But the 1,989 landed homes local buyers bought in the first eight months were well down from the 2,723 units in the same period last year.

Sentosa Cove is one of the only areas in Singapore where foreigners can purchase landed property.

Savills said strong foreign buying interest is poised to strengthen further on the back of more overseas funds flowing into Asia and more tightening measures in Hong Kong and mainland China.

While the Singapore Government is expected to tighten immigration policy, foreign talent is still needed to support the country’s economic growth, and this will ensure continued foreign interest in the housing market, Colliers’ Ms Chia said. Singapore’s reputation as a safe investment haven, conducive investment environment, strong currency and triple-A credit rating will also sustain foreign interest, she added.

But Knight Frank’s Mr Png cautioned that foreign demand is still dependent on overall macroeconomic conditions such as how the uncertainty in Europe and the United States pans out. Overseas purchases fell in 2008 during the global financial crisis, he pointed out

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
What have the cooling measures done for the real estate situation? Has it helped or hindered home buyers who are looking to purchase for owner-occupation, and have they really done what they were put out there to do?

16 Sep

Green buildings are Asia’s future

Besides only focusing on property prices, building up to save space and other cost-saving construction methods, Singapore is becomingly increasingly recognized for her efforts in building sustainable environments for both commercial, public and residential outfits.

This week marks the opening of Singapore’s third Green Building Week since it was established in 2009. Yet, in many ways, this amazing nation-state has already leapt ahead of its time to reflect what future green cities in Asia can look like as the region strives to adopt the kind of sustainable practices that are vital for maintaining long-term development and growth.

The third Singapore Green Building Week will include conferences and other activities throughout this week.

Going green is not some lofty ideal. A sustainable built environment is all about using our available resources more efficiently which, in turn, lowers costs in the long term. The basic unit of a sustainable built environment is a green building. Buildings have become our standard dwellings and we spend a significant amount of time in them, making a critical impact on the environment.

The International Energy Agency has estimated that existing buildings are responsible for nearly half of the world’s total primary energy consumption and about a quarter of its carbon dioxide emissions. Other findings indicate that buildings use about a third of the world’s resources, about a tenth of the world’s water, and are responsible for 40 per cent of solid waste generation. Air quality in buildings is also reported to contain up to five times more pollutants than outdoor air.

Non-green city-planning can only contribute to a rise in these figures. Much of this rise can come from Asia if sustainable practices fail to be adopted. According to a UN study, the share of Asia’s population living in urban areas has risen from 32 per cent in 1990 to 42 per cent in 2010.

Singapore's real estate industry will se a good many more green buildings in future. Photo courtesy of Singapore Tourism Board.

By 2026, half of all Asians will be living in cities. Already, seven of the world’s 10 most populous urban areas are in Asia. McKinsey and Co projects that by 2025, China alone will have 221 cities over Europe’s current 25. Clearly, there is a need for Asia to act now on its resource challenges. There is much optimism in the air. Already, green buildings have either become an aspiration or reality in Australia, China, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, and Singapore, and this is evidenced by the presence of green building councils in most of these countries. Industry bodies such as this, as well as individual companies, play a significant role in ensuring the topic of green buildings is on the agenda of governments, owners, clients and tenants. It is also important for companies to take leadership positions through working with government and industry to develop innovative green building solutions that continually lift the benchmark for sustainability.

The Building and Construction Authority's Green Mark Scheme began in 2005.

Singapore has gone ahead of the curve for some time and its green-building achievements are the most exemplary. The Singapore Building and Construction Authority’s (BCA’s) Green Mark Scheme launched in January 2005 has driven Singapore’s construction industry towards more environment-friendly buildings.

In 2007, the total number of buildings awarded the Green Mark was a mere 34. As at April 2011, there are more than 750 Green Mark building projects in Singapore – the highest number of certified green buildings in the region. This success is due to the BCA’s ability to drive home the benefits of green buildings in terms of cost savings from the efficient use of energy and water, which then lead to lower operation and maintenance costs, as well as higher productivity and better health among a building’s occupants.

It is no surprise then that a recent high-profile report by Solidiance, a consultancy firm, on the top 10 green cities in the Asia-Pacific region, has already ranked Singapore first in green building policy. At this rate, Singapore is definitely on track to achieve its target of having 80 per cent of its existing and future buildings Green Mark-certified by 2030 as charted out in the BCA’s 2nd Green Building Masterplan (a blueprint to achieve a truly sustainable built environment in Singapore by that year with projected annual savings of S$1.6billion in energy cost reductions).

Solar Photovoltaic Panels on the roof of a HDB flat. Photo courtesy of Energy Market Authority (EMA).

These achievements can only bolster Singapore’s standing as a model green city in the region. The same Solidiance report ranks Singapore the region’s fourth greenest city  after Tokyo, Seoul, and Melbourne in terms of sustainable living and carbon footprint reductions. Singapore ranks ahead of Osaka, Sydney, Auckland, Busan, Taipei and Hong Kong. In fact, according to the ‘Asian Green City Index‘ published by the Economist Intelligence Unit this year, Singapore ranks highest among the 20 cities polled (including aforesaid Hong Kong, Osaka, Taipei, Tokyo, and Seoul) in terms of overall results averaged out from eight categories (air quality; energy and carbon dioxide emissions; environmental governance; land use and buildings; sanitation standards; transport system; waste disposal; and water management).

Singapore’s achievements show that with bold policies and the right expertise, urbanisation and population growth do not have to result in environmental degradation. Since 1986, Singapore actually increased its green area by 50 per cent even as its population grew by 70 per cent. Singapore’s city-planning strategy also demonstrates that sustainable built environments can be created at the precinct level. A prime example is the Urban Redevelopment Authority blueprint for Jurong Lake District over the next 10 to 15 years as part of its 2008 Draft Master Plan to develop commercial hubs outside the city centre to accommodate new growth.

Jurong Lake District is one of URA's many green projects. Image by the Urban Redevelopment Authority.

This gives hope to Asia’s city-planners especially China’s who can expect to urbanise about 300 million rural citizens over the next 20 years. China’s pressing environmental challenges will definitely be on the minds of its officials at the International Green Building Conference with world-leading experts in Singapore later this week.

By acting now, Singapore demonstrates how a strong collaboration between industry partners, stakeholders and government bodies can shape a sustainable built environment that will not only assure long-term economic growth but also leave a positive legacy for generations to come.

The writer is chief executive officer for Asia at LendLease and is based in Singapore

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
As Singapore prepares herself to include a good million or more in terms of population, creating a sustainable environment will hopefully create a more livable country. We hope the green stays.

28 Aug

Are office space investments really taking over?

With all heads turned towards Europe and the US, and a sense of hesitation in the air, many property investors are shifting their focus from residential to commercial properties. But are property owners jumping ahead of themselves and setting the prices too high?

It has been taking longer to stitch investment sales deals for office blocks in recent months due to owners’ asking prices running ahead of the market, say property consultants.

Capital Square

According to Cushman & Wakefield, the average time on the market for office blocks has stretched from typically two to three months in H2 2010 and early 2011 to an average of four to five months these days. The last big-ticket office deal was Capital Square, which was sealed in March for $2,300 psf on existing net lettable area; its absolute price of $889 million has remained the largest deal size for an office block so far this year.

Cushman and Wakefield’s managing director of capital markets (Asia Pacific) John Stinson, who brokered that sale, believes it will ‘almost certainly retain the prize for the remainder of the year’. ‘Rising owner expectations are faced with a pullback from investors who see current asking prices too richly priced and out of step with acceptable rental growth expectations,’ he added.

The head of investment sales at a major property consultancy group said the dearth of big office transactions lately is due to pricing issues rather than the recent volatility in financial markets. ‘There is still appetite for Singapore offices from a variety of buyers, including Reits, other institutional investors as well as private investors from the region.’ ‘But deals are taking a bit longer to be done. If they’re correctly priced, deals can happen; if they’re incorrectly priced, they can’t happen,’ he added.

He reckons the office market may see greater clarity on pricing during the course of September, when expression of interest exercises for a few relatively palatably-sized buildings are scheduled to close – such as 135 Cecil Street and Robinson Centre.

Equity Plaza on Cecil Street.

Cushman said asking prices have been cited as $2,300-2,400 psf for locations like Cecil Street, Robinson Road and Cross Street, at the periphery of the Raffles Place CBD. Most office blocks in these locations are 10-20 years old and on sites with residual leasehold tenures ranging about 65-80 years, although there are also some 999-year and freehold properties.  ‘Asking prices are about $2,300-2,400 psf, but owners are apparently facing resistance for pricing exceeding $2,200 psf. And for larger transactions (in excess of $250 million), the hurdle seems to be closer to the $2,000-2,100 psf mark,’ says Mr Stinson.

‘For properties closer to the main Raffles Place square such as Market Street, Church Street and Phillip Street, there are reports of owners asking for $2,500-2,800 psf,’ he added. Jones Lang LaSalle’s Singapore and South-east Asia managing director Chris Fossick says there is a bigger pool of buyers for office blocks costing below $250 million – institutional players like property funds as well as private investors from the region.

Robinson Centre.

‘High net worth investors do not need to consider what institutional investors might need to such as Reits needing the investment to provide accretive income from the rental returns. ‘They’re not necessarily driven by internal rates of return. Instead they might say something like: ‘I like the Singapore dollar, the political stability and the 3-4 per cent yield on an office asset, which is higher than the cost of financing of around 2 per cent’.’

Private investors can also focus on the timeframe of their choice and do not need to base their investment decision on the short-term outlook, Mr Fossick added. Mr Fossick observes that Indonesians, who have historically invested in residential property in Singapore, are now diversifying into the office sector.

Cushman’s regional director (institutional investor group), Priyaranjan Kumar, said that ‘the intrinsic office market fundamentals remain healthy with Singapore poised for healthy rent growth for prime CBD office space averaging in the double digit per year until 2014 – due to current supply-demand dynamics’. CB Richard Ellis data show that total investment sales for offices in the first half of this year totalled about $2.9 billion. The figure for the whole of last year was $7.2 billion.

Wealthy investors are dipping into the commercial property market in Singapore. Image Courtesy of Singapore Tourism Board.

The property consulting group’s analysis also shows that between Q3 2009, when the market bottomed out after the global financial crisis, and Q2 this year, about $51.3 billion was invested in Singapore real estate. But only 3.5 per cent of this came from outside the Asia-Pacific region.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Although the commercial sector is certainly look set to grow, it depends on when the growth spurt might be. Match property prices to the current rental market and you will be able to see if putting your eggs in the commercial property basket will hatch you a pot of gold.

14 Aug

Property buyers: Will patience yield profits?

With the stockmarket acting up these past few weeks, many are fearing a rehash of the situation of the 2008 recession. What are many property buyers doing to hedge their assets and maximize profit opportunities?

Fears that interest rates will rise and stifle the local housing market have all but disappeared amid the unfolding global stock market turbulence. In a bid to stabilise markets, the United States Federal Reserve this week vowed to keep US interest rates at historic lows for at least two more years.

Singapore's property seems to have taken a punch by the recent bearish stockmarket situation.

But property buyers are taking a cautious attitude nevertheless, and are expected to wait to see how the stock market chaos plays out. Experts say the volatility has presented a double-edged sword that could fall either way. The low US rates are set to keep local rates at rock-bottom levels and bolster the housing market, but the recent wild stock market swings are likely to spook some property buyers, experts say.

Further blurring the picture – and analysts’ expectations – is a possible fresh financial stimulus in the form of a third round of US ‘quantitative easing’, which amounts to printing more money. This could send more cash flowing into the region, including Singapore and its property sector. The prospect of low rates for at least two more years was timely. Before that, fears had emerged that the end of the second round of US quantitative easing in June could have meant higher interest rates – belting the housing market.

With that fear seemingly on hold for two years, and on the back of a strengthening Singdollar, key local money market rates have responded by heading down. The three-month swap offer rate, for example, plunged into negative territory to -0.0119 per cent for the first time on Wednesday. With some mortgages pegged to this benchmark, experts say affected home loan rates might fall between zero and 0.6 per cent.

Financial considerations are key for property buyers.

Brokerage Kim Eng said yesterday low interest rates could keep demand for homes fairly strong, with owner-occupiers likely to be the key driver. ‘And with global stock markets heading into bear territory, it may prompt more investments in property in this part of the world as investors also seek to hedge against inflation,’ it added. ‘On a normalised basis, we still expect an average of 1,000 new private residential units being sold per month.’ But interest rates are only part of the housing equation. There have been several warnings of an impending glut while stock market volatility and the global economic storm could dent confidence.

In 2008 when stock markets dived at the start of the global financial crisis, home sales plummeted almost 70 per cent to just 118 units sold that October. Experts say, however, it is too early to tell how the current crisis will play out. It could be just a short-term blip or a longer-term correction that will chill the property market.

Boathouse residences in Serangoon. Image by Far East Organization, Frasers Centrepoint Homes and Sekisui House.

But buyers are likely to keep their heads down for the next few weeks. Still, 100 units have been sold at 493-unit Boathouse Residences in Serangoon at an average $880 per sq ft in the past week since a soft launch.

Mr Elson Poo, assistant general manager (sales and marketing) of its developer Frasers Centrepoint Homes, said: ‘The more popular (unit types at Boathouse) are the bigger ones which appeal to owner-occupiers. Investors, on the other hand, are on the sidelines, watching to see how the global economic development pans out before making a decision.’

There are many types of units to choose from at the Boathouse residences. Image by Far East Organization, Frasers Centrepoint Homes and Sekisui House.

Global Property Strategic Alliance chief executive Jeffrey Hong said demand, even for suburban homes, might be ‘stagnant’ for a while as buyers await clearer signs of the market’s direction. Mr Hong noted that the suburban segment – where many buyers are owner-occupiers or HDB upgraders – is likely to be less affected than high-end homes, which often attract investors.

Which direction will Singapore's property market go next?

UOL president Liam Wee Sin said concerns remain over the faltering US and European economies but added it was too early to tell how stock market volatility might affect property sentiment. He noted that low interest rates, ample funds and a strengthening Singdollar all boded well for the market although he expects sales and prices to moderate.

‘There are different segments of buyers. Foreigner purchases, for example, may continue unabated as the strengthening Singdollar might make residential properties here a relatively safer asset to invest in compared to the volatile stock market,’ added Mr Liam.

Property investor Sameer Aswani, a 35-year-old businessman, said the Singapore market is still fundamentally sound despite the shaky global economy. ‘Interest rates are at an all-time low so if a good opportunity arises, I will still go ahead with a home purchase,’ he added. ‘At most, I see the market correcting slightly but of course in the light of the uncertainty now I’ll be more cautious.’

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
The direction seems a little wobbly for now, but as we wait for the stockmarket to correct itself, residential and commercial properties are still exchanging hands with certain fervour, especially in the suburban areas.

22 Jul

Singapore – No. 2 for top global companies

Global companies are flocking to the little red dot that is Singapore. Reasons businesses choose to set up shop here include the readily available, and competitively priced office spaces.

Singapore is the No. 2 choice for top global companies wanting to set up shop in key cities of the world, says a research report by CB Richard Ellis (CBRE).

With the shift in global economic power, Asia’s booming cities are also increasingly dominating among the world’s top business locations, the survey showed. The Fortune Global 500 list was used to help identify the companies to be included in the survey.

Following Hong Kong, Singapore has qualities that attract major global companies. Image courtesy of Singapore Tourism Board

Hong Kong topped the list, out of 232 international cities. About 68.2 per cent, or 191 companies out of the 280 top global companies included in the survey, had an office there. Singapore came in a close second, with 67.5 per cent, or 189 companies, having an office here. Tokyo, London and Shanghai rounded out the top five.

In terms of country, however, Singapore was ranked 12th, with the United States taking the top spot, followed by Britain, France, China and Germany. CBRE noted that Singapore is the top choice for companies in the industrial goods and services sector, and is among the top five in media, and banking and financial services.

Office spaces are increasing, with new commercial properties such as Novena Specialist Centre.

Ms Petra Blazkova, CBRE Research head for Singapore and South-east Asia, credits the island’s favourable ranking to the quality, quantity and competitive cost of its office space in attracting businesses. However, it is Hong Kong’s ‘unique position’ that has propelled it to prominence.

Mr Nick Axford, CBRE head of research for Asia-Pacific, said: ‘Hong Kong is the key gateway city for accessing China, and is the city set to benefit most from the gradual liberalisation of the Chinese financial services markets. ‘The city holds a unique position from which international businesses can operate globally, due to its location, lack of foreign ownership restrictions, trilingual mix and international, highly skilled workforce,’ he added.

Location decisions are typically based on corporate strategies designed to cut costs, access low-cost or skilled workers, and reach new markets, said CBRE.

 

As future global economic growth is expected to be fuelled by emerging markets, particularly those in Asia, cities like Hong Kong, Singapore and other large Asian centres are being viewed as key business hubs for exploiting that anticipated growth in the region, the firm added.

Aside from prime business districts and the central region, office spaces are also available in the suburbs.

Said Mr Axford: ‘It will be interesting to see how the role of these markets changes in future years, as rents and labour costs increase in Asia, and these cities are potentially not as cost-efficient.’We do, however, expect there to be a polarisation between top-tier Asian cities, which will only become more prominent in a global context, and second-tier Asian cities, which will provide low-cost locations for corporates.’

CBRE noted that Singapore is the top choice for companies in the industrial goods and services sector, and is among the top five in media, and banking and financial services.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Businesses may certainly find that office and industrial spaces are increasing in numbers, but do they find the cost of living too high? What about rental rates of residential properties? Will these considerations affect their decision to locate their businesses here?

12 Jul

Asia Square – the new office on the block

With 62% of space at the new Asia Square project already taken up, and 20% pending negotiation, it seems like this is THE next spot to be for businesses in the know.

Developer MPGA seems to have timed it right, with office rents rising just as the first tower is completed at its Asia Square project.

Asia Square project by MPGA. Image courtesy of MPGA.

Global events like the Japan tsunami and the euro zone debt crisis depressed financial markets worldwide, but have since proved a boon for Asia Square.

Rents slowed in the wake of the crises, but strong demand meant that space in competing office blocks was quickly taken up, leaving Asia Square poised to ride on the need for office space.

Mr Luke Moffat, head of leasing at the mixed-use development, said 62 per cent of the 1.26 million sq ft of office space in Tower 1 has already been snapped up. He added that a further 20 per cent is under negotiation. This could bring the total amount of committed space to around 80 per cent by the year end.

The first tenants will be moving in towards the end of this month. Marketing for Tower 2, which is set to receive its temporary occupancy licence in August 2013, is expected to start early next year.

‘The property market in Singapore is in really good shape in terms of commercial property… The next building coming up after our Tower 2 is Market Street Carpark in 2014, so we have a good run ahead where there’s no other new buildings coming up,’ said Mr Moffat.

Ocean Financial Centre

A CBRE report estimates that 8.4 million sq ft of potential office space will come onstream between now and 2015.

A DTZ report predicts that about 3 million sq ft of space, including Asia Square and Ocean Financial Centre, will be on the market this year.

The second tower of the Marina Bay Financial Centre (MBFC) will receive its temporary occupancy licence later this year.

A Malaysia-Singapore joint property venture is also set to develop four sites in the Marina South area.

Mr Moffat said the extra space does not pose any threat to MGPA’s office assets here. ‘The more supply that is added to Marina Bay… the more compelling the area becomes. Building more office space means the area becomes more vibrant, more of a centre,’ he said.

Offices at Asia Square are priced from $14 per sq ft (psf) per month, but the developer said it recently secured a contract at $16 psf, a figure that some industry experts said can be challenging to hit, despite the market’s bullish outlook.

But Mr Calvin Yeo, executive director of office services at Colliers International, said unique quality projects – such as Asia Square and MBFC – are few and far between.

Marina Bay Financial Centre. Image by Raffles Quay Asset Management Pte Ltd.

‘Space on higher floors with views can command a premium, particularly for smaller users because of the lower quantum,’ he said.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
The commercial property scene is ever changing, affected also by external factors such as the global economy and governmental policies. How will this sector fare for the rest of 2011?

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