Two foreign banks, ANZ and BNP Paribas, have become the latest to sign up for space at Ocean Financial Centre at Raffles Place. This raises the pre-commitment levels at the building to over 60 per cent.
Analysts said demand and rentals for prime office space is expected rise in the short term as companies in the region continue to expand their businesses.
Putting the final touches at the topping-out ceremony, Ocean Financial Centre appears on track to being completed by the second quarter of next year.
Keppel Land which is behind the development, said it’s bullish on the demand for prime office space with an improving economy.
It expects the building to be fully let before completion.
Choo Chaiu Beng, CEO, Keppel Corp & chairman of Keppel Land, said: “The amount of prime grade A office is limited and we see that the demand will exceed the supply.
“Right now we are quite confident that we make the right decision to continue the construction despite the financial crisis and now we are finishing the building towards the recovery phase of the financial crisis.
“We can see that with the economy recovering and the international financial people moving to Singapore, the take up of Grade A prime offices has improved.
“What we see is that there will be increasing shortage of good quality spaces in the CBD. We are quite bullish that the building will be fully let out before too long.”
ANZ and BNP Paribas are among the latest to sign up for space at the building.
ANZ will take up nine floors but declined to say how much it’s paying for its lease except that it’s competitive enough to achieve rental savings.
Bill Foo, CEO, ANZ Singapore, said: “It will help us to consolidate into one dominant location and that is when you have a lot of synergies and also efficiencies. Plus also the fact of bringing in a lot of departments of the banks that will help us to function a lot more competitively.”
According to Jones Lang LaSalle, current Grade A office space rent is at S$7.95 per square foot.
Analysts think that prime office rents may rise by up to seven per cent for the rest of the year.
Dr Chua Yang Liang, head of Research, Southeast Asia, Jones Lang LaSalle, said: “Rents actually increased on a quarterly basis last quarter about two-over percent. We see that going forward this demand is likely to continue because most of the buildings we know and those that are coming up onstream next year – new ones – are already mostly pre-committed is quite high.”
Observers said the strong take up in prime office space has also been reflected in the upcoming Marina Bay Financial Centre, which will be fully complete by 2012.
Tower 1 and Tower 2 are already fully leased, with a small percentage of space reserved in Tower 2 for existing tenants’ expansion.
Tower 3 pre-commitment levels are currently at 55 per cent.
Nearby development 50 Collyer Quay has obtained pre-commitment levels of 22 per cent ahead of its completion next year.
Overseas Union Enterprise, which is behind the Collyer Quay project, made the announcement on a statement filed with the stock exchange.
Beyond next year, market watchers said demand for office space to hinge on macroeconomic factors, with the largest risk factors coming from concerns hanging over the Euro zone.
Jones Lang LaSalle said it is currently relooking its forecast for prime office space next year to take into account the potential risks such as companies scaling back their expansion plans.
Source: Channel News Asia, 7 Jul 2010