S’pore offices attractive due to cheaper rents compared to other financial centres

Singapore’s cheaper office rents compared to those in other key financial centres are making the city-state the choice location for business start-ups.

Consultants Colliers International found that in the second half of last year, the annual average gross rent of an office in Singapore was about US$53.71 or S$76 per square foot.

Singapore’s closest competitor, Hong Kong, was priced at US$161.14 or S$225 per square foot.

This was disclosed in Colliers International’s latest global office real estate review.

The review tracked office performance across 154 international cities between June and December last year.

In the review, Singapore was ranked the 24th most expensive office location, up two notches compared to the previous survey in the first half of last year.

Hong Kong retained its position as the most expensive office location with London’s West End coming in second and Tokyo, third.

Colliers International said Singapore’s office rents have continued to decrease.

But the pace of decline has slowed to 6.5 per cent in the second half of last year, compared to 42.3 per cent in the first half of 2009 in local currency terms.

Colliers International said on the investment sales front, after a 2.5 year period of decline, global sales in the second half of last year totalled US$41.8 billion, a 42.3 per cent increase from the first half.

It said this shows the bottom may have been reached and global property sales are now set to go higher.

Asia Pacific it added is leading the property investment recovery.

Looking ahead, Colliers International said Singapore’s office market is expected to ride on the economic recovery this year.

Its Research and Advisory Director, Tay Huey Ying, said: “It will build on the momentum in the fourth quarter of last year during which demand for office space expanded by 301,000 square feet.”

Colliers noted that phase one of the 1.6 million square feet Marina Bay Financial Centre has been fully leased ahead of its completion this year.

The Central Business District still has more than six million square feet of space in the pipeline.

But at least one third of the potential supply has already been pre-committed by tenants.

Colliers International said the Singapore office market is expected to see a modest recovery with up to five percent increase in rents in 2010.

Source: Channel News Asia, 5 Apr 2010