Category Archives: Singapore Office

Prices of office space remain flat in 2015: URA

Prices of office space in the Republic remained flat for the whole of 2015, dropping just 0.1 per cent from the year before, while rentals declined by 6.5 per cent.

For the fourth quarter, prices of office space also decreased 0.1 per cent from the previous quarter. Rentals, however, fell 1.8 per cent in the fourth quarter, compared to the 2.9 per cent drop in the third quarter of 2015.

As of the fourth quarter, there was a total supply of about 993,000sqm gross floor area of office space in the pipeline, said URA.

Both the stock of office space and the amount of occupied office space decreased in the fourth quarter, by 21,000sqm and 10,000sqm respectively. The island-wide vacancy rate of office space at the end of the fourth quarter was 9.5 per cent, down from the 9.6 per cent in the third quarter.

Source : Channel NewsAsia – 22 Jan 2016

2016 office vacancy rate seen hitting double digits

Commercial property prices and rentals fell further in the fourth quarter of last year, as supply outpaced demand.

According to figures released by the Urban Redevelopment Authority (URA), office rents fell by 1.8 per cent in Q4, albeit at a slower pace of decline than the 2.9 per cent decrease in Q3.

This led to a full-year drop of 6.5 per cent, which eroded most of the gains achieved in 2014 when rents rose 9.8 per cent.

Weak leasing demand led to net absorption of office space turning negative in Q4 with nett 107,639 square feet of space given up.

However, shrinking new office stock during the quarter resulted in vacancy rates holding steady at about 9.6 per cent.

But with the supply overhang of more than four million sq ft in gross floor area of office space slated for completion in 2016, vacancy rates will surge past double digits this year, said Christine Li, research director at Cushman & Wakefield.

Alan Cheong, Savills Singapore’s research head, said: “2015 was when advance notice was given by investment banks and tech companies of their medium-term real estate needs . . . with many foreign banks scaling back and tech companies split in their choice of traditional office versus business park space.”

Consultants believe that the weak office leasing was due to a slump in business sentiment, weak macroeconomic conditions on the back of China’s slowdown, and continued volatility in the Chinese stock market reverberating through global economies.

Ms Li said: “With prime rents projected to slide by a further 10-12 per cent in 2016, a wave of flight to quality is expected as tenants seize the opportunity to lock in long leases in the upcoming premium developments at attractive rental rates.”

This is already a more conservative forecast, compared to Chris Archibold, JLL’s head of markets, Singapore, who expects prime office rents to plunge 10 to 20 per cent in 2016.

Despite the fall in rents, office prices stayed resilient with both a quarter-on-quarter and year-on-year dip of just 0.1 per cent in the fourth quarter.

Consultants said the resilience in price could be due to the scarcity of prime assets available for sale, as well as the weight of capital looking for investments.

The office sector continues to see strong overseas interest with foreign investors bidding for Asia Square Tower 1 and One George Street.

BlackRock Real Estate, which owns Asia Square Tower 1, has said that talks with several buyers are in progress, even after CapitaLand last November bowed out of negotiations.

An expression of interest exercise is also said to have ended early last month for the sale of a half stake in CapitaLand Commercial Trust’s One George Street office tower.

Analysts think that office capital values will in time start to track rental growth and moderate further, but it is hard to say exactly how long it will take before the market sees a more significant drop in office prices.

On the retail space front, rentals fell 1.3 per cent in Q4, after falling 2 per cent in Q3. For the whole of 2015, rentals have fallen 4.1 per cent.

This comes as some retailers are consolidating their businesses, to counter cost and operational pressures. Vacancy rose from 7 per cent in Q3 to 7.2 per cent in Q4, as there was negative absorption of space.

Prices of retail space too was more resilient, falling 0.1 per cent in Q4, after falling 0.3 per cent in Q3. For the whole of 2015, prices had fallen by 0.8 per cent.

Mr Cheong from Savills said: “Notwithstanding the problem of stagnant retail sales, the retail space sector is holding up reasonably well. Although softness can be seen in the rental market, they are still consolidating in an orderly manner.”

23 Jan 2016

CapitaLand Commercial Trust said to seek sale of One George Street office tower

CapitaLand Commercial Trust, Singapore’s largest office real estate investment trust by value, is selling an office tower in the city-state’s central business district, according to a person familiar with the transaction.

CapitaLand Commercial is seeking to sell the 23-story One George Street building in the Raffles Place office district, the person said, asking not to be named as the information is private.

The building, whose tenants include Royal Bank of Scotland Group Plc and Diageo Singapore Pte, has 41,564 sq m of lease area, according to the trust’s website. The tower, bought in 2008 for S$1.17 billion, was valued at S$975 million as of Dec 31, 2014, the website showed.

CapitaLand Commercial Trust Management Ltd, the manager of CapitaLand Commercial Trust, didn’t comment on its plans for One George Street beyond saying it “adopts an active portfolio management strategy to evaluate plans for CCT’s properties from time to time,” according to an e-mailed statement in response to a query.

The proposed sale comes as another prime office tower, Asia Square Tower 1, has been put up for sale by BlackRock Inc, in a deal that when concluded could make it the biggest office transaction in Singapore. The value of office buildings in the city-state fell 0.1 per cent in the quarter ending Sept 30 from the previous three months while shops declined 0.3 per cent, according to the Urban Redevelopment Authority.

Rents in the central business district fell 4.5 per cent in the three months ended Sept 30 from the previous quarter, according to Jones Lang LaSalle Inc. Rents will trend lower this year as about 3.07 million square feet of office supply will be completed, it said.

The vacancy rate in the central business district increased to 6.1 per cent in the three months to September.

Vacancies are expected to rise gradually over the next few quarters as some occupiers, mainly from the financial sector, give up space, Jones Lang LaSalle said.

13 Jan 2016

The Keppel Group consolidates ownership of Keppel Bay Tower

Keppel Corporation Limited (Keppel Corporation) and Keppel Land Limited (Keppel Land) have today, through a subsidiary, entered into and completed a share purchase agreement with Mapletree Investments Pte Ltd (Mapletree) to acquire the remaining 30% interest in Harbourfront One Pte Ltd, which holds Keppel Bay Tower, for a consideration of approximately $180.9 million.

This is part of a share swap transaction with Mapletree that sees the holding companies under Keppel Corporation and Keppel Land (the Keppel Group) divesting to Mapletree their 39% interest in Harbourfront Two Pte Ltd, which holds Harbourfront Towers 1 and 2, for a consideration of approximately $225.7 million.

Mr Loh Chin Hua, CEO of Keppel Corporation and Chairman of Keppel Land, said, “The share swap will allow Keppel Group to increase its interest in Keppel Bay Tower from the current 70% to 100%, thus consolidating our full ownership of the building. The share swap presents an attractive opportunity for the Keppel Group to unwind the cross holdings with Mapletree and augment Keppel Land’s sterling portfolio of prime commercial properties.”

Keppel Bay Towers and Harbourfront Towers 1 and 2 were jointly developed by Keppel and Mapletree in 2002 as part of the Keppel Bay and Harbourfront development. Keppel Bay Tower and Harbourfront Tower 1 are 18-storey twin office buildings with floor plates ranging from 15,000 to 40,000 sf, whereas Harbourfront Tower 2 is a smaller 16-storey office building with a floor plate of 11,000 sf with the Singapore Cable Car station located on the 15th storey, offering a total of about 910,200 sf of quality office space in the Keppel Bay and Harbourfront precinct.

The agreements for both the acquisition and divestment were negotiated on a willing-buyer and willing-seller basis.

The transactions are not expected to have any material impact on the net tangible assets per share or earnings per share of Keppel Corporation for the current financial year.

Source: Keppel Group – 30 Dec 2015

S’pore office rents seen easing until 2016 at least

A YEAR ago, property consultants were predicting that Singapore office rentals would continue rising in 2015, albeit at a slower clip than last year.

However soon after 2015 started, the mood dampened quickly on the back of weak demand – especially from financial institutions, the key constituent of CBD office demand – and ahead of a surge in office completions next year.

Savills Singapore now estimates that for this quarter, its Overall CBD Grade A average monthly rental value for a typical 5,000 sq ft lease is S$9.36 per square foot, down 5.3 per cent from a year ago. This contrasts with a 14.4 per cent increase last year.

JLL estimates a 14.4 per cent full-year drop in its CBD Grade A average office rental value to S$10.32 psf as at Q4 2015 – contrasting with last year’s 16.1 per cent hike.

To put things in perspective, last year’s rental increase was on the back of tight supply rather than strong demand. But ahead of a big surge in office completions next year – including at Duo, Marina One and Guoco Tower – and the sudden weakening in demand, office rents are ending lower this year.

“It is a year where the market surprised almost overnight and turned south without much warning,” said Savills Singapore research head Alan Cheong. “The supply coming on stream is so evident to even non-property specialists that it is difficult to explain to tenants why rents will not collapse. However we believe that whilst rents will be soft, they will not come crashing down because landlords are financially strong and the market for Grade AAA and AA offices are an oligopoly.”

Most consultants expect rents to keep easing till next year at least, with some like Mr Cheong expecting the slide to continue to 2017 and possibly even 2018.

As for next year, Chris Archibold, international director and head of markets at JLL, said: “The key challenge is that we have 2.8 times the average office supply coming on stream being met by a market that is experiencing half the 10-year average annual demand.” Moreover, there is a substantial amount of space available for lease at Mapletree Business City II, which is also completing next year, that will compete with the new office supply, he added.

Summing up the sudden turn in the office market, Mr Archibold said: “The CBD office market in 2015 saw an initial rise in rents as vacancy tightened. Sentiment was buoyed during this period by technology and social media firms expanding rapidly and seeking out new office space in late 2014/early 2015. South Beach and CapitaGreen were key benefactors of these trends.

“However, the positive momentum tailed off as the market started to price in the effect of the unusually large amount of new office supply coming on stream in 2016. This, coupled with lower than average take-up and the surrender of office space by financial institutions, has been weighing down on rents.”

In similar vein, CBRE managing director, brokerage, Singapore, Moray Armstrong, said: “The dampening impact of the upcoming supply wave was accelerated ahead of physical completion of projects that are scheduled to come on line only from Q3 2016 onwards … The downturn in the energy and commodities sector and continuing challenges in the financial sector have certainly impacted office demand from these important industries.”

JLL’s Mr Archibold highlighted other global macro trends that have negatively impacted business sentiment and consequently Singapore office demand this year: the lacklustre US economy, instability in the eurozone and China’s weak economy. Some occupiers chose to move out of the CBD to suburban offices where rents are cheaper – such as Daimler and mechanical engineering services firm Beca’s relocation to Westgate Tower in Jurong.

On a positive note, new media and technology companies have been on an expansion wave this year – some within the CBD (for instance Facebook and LinkedIn), with others entered into big leasing deals to move to business parks in the suburbs from CBD offices, such as Google, Mr Archibold noted. Mr Armstrong of CBRE too highlighted that the “IT and, in particular, the e-commerce sectors are expanding and contributing meaningfully to take-up in both the office and business park markets”.

Savills’s Mr Cheong estimates this year’s Grade A CBD office demand, or net take-up, at around 600,000 sq ft – down from 701,000 sq ft in 2014 and 960,000 sq ft in 2013. This year’s demand reflects a 45 per cent drop from the 10-year average annual figure of 1.1 million sq ft. “Based on our model forecast, the estimated net take-up for 2016 is 747,000 sq ft, followed by 1.67 million sq ft in 2017.”

He predicts that the CBD Grade A vacancy rate will rise from 4.3 per cent this quarter to 10.2 per cent in Q4 2017 before easing to around 9 to 10 per cent in Q4 2018.

JLL forecasts that its overall CBD vacancy rate will climb from 6.1 per cent this quarter to 11.6 per cent in Q4 2016 before abating to 9.5 per cent in Q4 2017. It estimates islandwide net take-up of private-sector office space at about 695,000 sq ft for this year – or half the 10-year average annual (2005 to 2014) figure of 1.37 million sq ft based on government stats. On the supply side, for this year, JLL estimates the net increase in islandwide completed private-sector office space will be just 61,640 sq ft, after factoring in the (temporary) removal of office stock from the market such as at GSH Plaza, which is undergoing a revamp.

Next year, JLL expects some 3.35 million sq ft of offices to be completed on the island, which would be more than twice the 1.2 million sq ft 10-year average.

JLL expects the average monthly rental value of its CBD Grade A office basket to fall 8.9 per cent from Q4 2015 to S$9.40 psf in Q4 2016, before recovering to S$9.65 psf by Q4 2017. Mr Archibold expects the contraction in office rents to be ameliorated, especially in 2018 and 2019 as the global economy recovers and there is only a moderate amount of office space coming on stream at the time, based on the current supply pipeline.

Savills’s model, on the other hand, predicts that the rental slide will continue till 2018. It expects its Overall CBD Grade A average office rental to retreat 8.7 per cent next year, followed by further declines of 8.8 per cent in 2017 and 6.3 per cent in 2018; its Q4 2018 rental forecast is S$7.31 psf, compared with S$9.36 psf this quarter. “Although we expect rents to continue to soften in 2018 over 2017, there is a possibility that the market may surprise us with a mild recovery in 2018, assuming there is no global cataclysmic event and no big release of government land sale sites for office developments,” said Mr Cheong.

Tenant retention is topmost on the minds of landlords. “In terms of interest in the new developments,” said Mr Archibold, “some occupiers are waiting to see if the market becomes more tenant-friendly and options open up.”

“That said, certain savvy tenants that need space for critical infrastructure such as back-up air-conditioning or generators, or for branding such as naming rights or signage – ie, elements of a development that are limited in supply – are still active in order to ensure they can secure what they need,” he revealed.

Mr Armstrong acknowledged that there are some very attractive deals on offer to occupiers as developers of new office projects compete to secure leasing commitments and build occupancy. “Tenants that are in a position to capitalise will be able to secure lease benefits beyond just the financial impact. Landlords will be highly flexible for sure, but the window of opportunity for tenants may close sooner than many expect.”

BT – 11 Dec 2015

CPF Building sold for S$550m to Ascendas Land company

The landmark CPF Building at 79 Robinson Road has been sold for a higher-than-expected S$550 million, the CPF Board announced on Thursday (Nov 26).

The public tender for the sale of the building attracted three bids, the highest of which was by Southernwood Property, a company wholly owned by Ascendas Land.

Analysts had expected the building to fetch about S$450 million.

The CPF Board said the bid from Southernwood Property met all tender criteria, “including the strength of their financial standing and purchase conditions such as the assignment of tenancies to the new owner”.

The other two bids were S$538.28 million by Leapford, a company owned by Pacific Century Regional Developments, and S$280 million by OUE Reef Development.

An earlier report quoted the building’s marketing agent CBRE as saying that it could be redeveloped into a mixed use development with office, retail and serviced apartments or a hotel, subject to approval from authorities.

The CPF Board will be moving to Novena Square Towers “to free up prime office space in the Central Business District for higher-value uses”. Its corporate operations relocated on Nov 23.

The CPF Service Centre will continue to operate at 79 Robinson Road until further notice.

Source : Channel NewsAsia – 26 Nov 2015

Firms look to co-working spaces to lower costs

Instead of being tied down to a rental agreement, a growing number of firms and individuals are looking to pay for office facilities as and when they need the space.

An office format called co-working, is trying to fill the gap. It has been gaining popularity in the past two years, with more than 20 such providers popping up around Singapore.

WorkCentral is the newest kid on the block, joining the likes of The Hub and The Co in offering open, collaborative workspaces for companies and individuals. Such co-working spaces offer flexibility to companies looking to keep overheads low and not commit to a long-term lease.

Member companies can access the facilities any time they wish to, which also include a dedicated room with fixed line telephones.

After opening its new premises in Dhoby Ghaut last month, Work Central already has 10 members. It says part of the appeal of co-working spaces is the opportunity to collaborate with co-workers.

“When you wish to, you could have a chat with a co-worker (from a different member company) at the pantry or by the water cooler,” said Mr Paul Lee, founder and CEO of Work Central. “They’re not necessarily people who are directly related in terms of the industry they’re in, but one of your fellow co-workers that could provide a service for you. For example, if they’re a web designer, and you need to set something up, it’s convenient and easy to just have that working relationship right there.”

While the concept itself is not new, co-working spaces have been gaining traction recently. Last year, the Infocomm Development Authority (IDA) partnered with global workplace provider, Regus to set up work spaces in libraries for individuals and small companies.

Besides opportunities to collaborate, Regus says co-working is also cheaper than traditional service offices.

“It’s very cost effective and yes, cost is a massive part of it,” said Mr Paul MacAndrew, Regus’ country manager in Singapore. “Obviously if you went out and you opened up a space yourself, it’d cost you a lot of money and people don’t want to be fixed to a desk. They want the flexibility to work where they want and when they want. Absolutely, cost is a big factor.”


Property research firm, SLP International, says this trend will only continue to grow. With new offices in the Marina Bayfront area expected to be completed in next few years, SLP said the new supply could open up more spaces for such co-working spaces, especially on the city fringe.

“The startups who might have limited budgets and a bit more high risk, and they’re not sure if their business idea could work or not, will still be attracted to the low cost type of working space, so there is still a market for co-working spaces,” said Mr Nicholas Mak, SLP’s executive director.

“There’s even the possibility that some of the co-working spaces could be located in the CBD, but the cheaper rents are likely to be those commercial spaces which are more in the city fringe area, and if they are located near transportation nodes, for example MRT stations. They can still attract this startups and small companies.”

Both WorkCentral and Regus are looking to expand their co-working space footprint. Regus said it plans to bring in more co-working options next year, while Work Central hopes to eventually make inroads into Indonesia.

Source : Channel NewsAsia – 20 Nov 2015

CPF Board at Robinson Road relocates to Novena Square

The corporate operations of the Central Provident Fund (CPF) Board at the CPF Building at 79 Robinson Road will relocate to Novena Square Towers A and B from Nov 23.

In a news release on Monday (Nov 16), CPF said the relocation will free up prime office space in the Central Business District for higher-value uses. The CPF Building at 79 Robinson Road has been put up for sale through a tender and bids are currently being evaluated.

According to CPF, the move does not affect the CPF Service Centre at 79 Robinson Road which will continue to operate on the second floor of CPF Building until further notice. The customer hotline (1800-227-1188) and email ( or also remain unchanged.

The new CPF Board corporate address at Novena Square is:

238B Thomson Road
#08-00 Tower B Novena Square
Singapore 307685

Source : Channel NewsAsia – 16 Nov 2015

CapitaLand ends discussions to buy Asia Square Tower 1

CapitaLand, South-east Asia’s biggest developer, says it has withdrawn from negotiations to buy Asia Square Tower 1.

The company will continue to explore opportunities that allow it to generate required returns, it said in a statement today (Nov 4). CapitaLand didn’t give a reason for its decision.

A consortium of Norway’s sovereign wealth fund and CapitaLand was chosen as the preferred bidder for the tower being sold by BlackRock Inc, in what may become the biggest office deal in Singapore, people with knowledge of the matter said last month.

The 43-storey tower, located in the new financial district at Marina Bay, could be valued at more than S$3.5 billion, the people said last month. BlackRock, the world’s largest asset manager, said earlier this year that it had received expressions of interest for Asia Square Tower 1 and could get more than S$4 billion for the building, whose tenants include Citigroup.

CapitaLand’s third-quarter profit jumped 48 per cent to S$192.7 million as revenue rose 17 per cent to S$1.08 billion, the company said today. Residential sales in China more than doubled in the quarter from a year earlier. The developer said property cooling measures in Singapore will continue to weigh on its home market.

Singapore home prices have dropped for eight straight quarters, matching the longest losing streak in 13 years, as tighter mortgage lending sapped demand in Asia’s second-most expensive luxury housing market. The Government began introducing residential property curbs in 2009 as low interest rates and demand from foreign buyers raised concerns that the market was overheating.

Source : Today – 4 Nov 2015

Lloyd’s opens new, bigger office in CapitaGreen

Insurance giant Lloyd’s on Wednesday (Nov 4) opened its new, bigger office in CapitaGreen, as it looks to expand its presence and tap regional growth.

Lloyd’s has been operating in Singapore since 1999. It has grown to 20 service companies with 24 syndicates and more than 380 employees, making it Lloyd’s largest hub outside London.

Lloyd’s chief executive officer Inga Beale, who was in Singapore to open the new office, said the new location affirms Lloyd’s intent to grow its business in the region.

She said: “Singapore is very clearly becoming the insurance and reinsurance hub for the region. I think it’s the perfect combination for Singapore to become a real hub for insurance and reinsurance in the region.”

Source : Channel NewsAsia – 4 Nov 2015