Hongkong Land seeks more Singapore office plots

Hongkong Land Holdings, which owns a stake in the biggest developer of Marina Bay Financial Centre (MBFC), will seek more commercial plots in Singapore, as tenants seek to upgrade to new buildings.

Hongkong Land, as part of a venture with Cheung Kong Holdings and Keppel Land, is eyeing land purchases in Singapore’s prime office areas when the Government puts them up for sale, the company’s Executive Director Robert Garman said.

The venture built the MBFC for about S$4.5 billion.

Global banks such as Standard Chartered and Macquarie Group have upgraded their Singapore offices to new locations developed by Hongkong Land and its partners, while Barclays and Nomura Holdings have relocated regional and global functions to Singapore, ranked the easiest place to do business for seven straight years by the World Bank.

Monthly prime office rents rose 4.2 per cent in the quarter ended June from the previous three months, according to property consultancy Cushman & Wakefield.

“We are confident of the Singapore office market. There are still multinational companies that remain in older properties, so one can argue that there is sufficient demand that can be absorbed in this new district,” Mr Garman said this week.

Among companies set to upgrade their offices are National Australia Bank and Swiss Reinsurance, which plan to take space at Asia Square Tower 2 in MBFC, according to property consultancy Colliers International.

A lot of the new demand is also coming from the energy and mining sectors, such as BHP Billiton and Rio Tinto, Mr Garman said.

“Over the past 10 years, you have seen a migration of a lot of companies out of older stock, particularly the banks, where they have more demanding needs that the older buildings cannot provide,” he said.

The area known as Marina Bay is a 360-ha strip created from reclaiming land off the sea fronting the banking district, and now includes Las Vegas Sands’ Marina Bay Sands casino-resort with a convention centre that is able to accommodate 45,000 delegates. The 3.55-ha MBFC was completed last year and officially opened by Prime Minister Lee Hsien Loong in May this year.

Rents in MBFC posted the strongest start to a recovery, climbing 10.9 per cent in the three months ended June from the March quarter, while the vacancy rate declined 2 percentage points to 3.6 per cent, according to Cushman & Wakefield.

“We are at a cusp where rents are bottoming out this year, and pricing power will shift back to the landlords next year,” said UOB Kay Hian analyst Vikrant Pandey. “The economy is picking up, which will translate into better office demand.”

Singapore last month raised its forecast for economic growth to between 2.5 and 3.5 per cent this year, up from 1 to 3 per cent. The economy expanded 2 per cent in the first half, Mr Lee said on the eve of National Day.

But not all agree that Singapore’s office market is on a steady path to recovery. It remains difficult and fragile, with the global economy still searching for a sustainable growth model, said Ms Chia Siew Chuin, Director of Research & Advisory at Colliers.

The euro zone remains the key area of concern, with governments trapped in austerity and banks reluctant to lend because of economic uncertainty, she said.

Source : Today – 7 Sep 2013

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