More American companies are feeling the heat from rising rentals for homes and offices here.
About 61 per cent say their housing expenses have swelled over the past six to 12 months, according to a survey by the American Chamber of Commerce (AmCham) in Singapore, which polled 95 senior managers from US firms.
The proportion is up significantly from the 42 per cent that felt so in the same poll last year, AmCham said on Friday.
The chamber’s executive director Dom LaVigne said housing costs were increasingly a headache for Americans working here due to a recent reduction in the amount of housing allowance that an expatriate can exclude under the US tax code.
Rising office rents were also a concern. About 45 per cent said office lease costs had risen sharply this year versus 29 per cent last year.
Recent statistics back such views. Housing rentals have surged after being depressed for the past decade. With increasing en bloc activity taking more supply off the market, private home rentals have climbed unabated over the past few quarters.
Office rentals have more than doubled in the first quarter to $10.60 per square foot (psf) compared to the rate of $4.48 psf in the third quarter of 2003.
Complaints aside, US firms unanimously gave the thumbs-up to the quality of life here.
“Our members continue to regard Singapore as an important place from which to conduct their regional business activities,” said Mr LaVigne.
He added that senior management from at least two American companies were planning to relocate from around the region back to Singapore, citing reasons such as better living environment and business transparency.
AmCham said there might be some 200 new American expatriates arriving to work here in the year ahead.
They will bring with them about 300 school-going children, which could put a fresh strain on the international schools. To address the issue, AmCham said it was in talks with the Education Ministry on the possibility of enrolling some of the new American students into Singapore schools.
AmCham’s survey showed bearish sentiments towards other Asean countries. Corruption, protectionism and weak laws were cited as major concerns. But these have not dented American interest in the region of some 600 million people, said Mr LaVigne.
He added that the American business community was looking forward to the day when Asean is unified as a single trade entity like the European Union.
Singapore office space prices breaking 1996 record
Prices for office space in Singapore have broken a record high set in 1996, when the real estate bubble reached its peak, and even higher benchmarks are likely to be achieved soon, experts said on Friday.
A floor at a building located in the business district has been sold for $2,850 per square foot, up from 1996’s record of $2,200. The sale was for the 24th floor of a 25-storey building owned by developer Far East Organization. The developer is asking for $3,200 per square foot for the 25th floor in the same building, said sources.
According to analysts, Singapore’s current office space crunch means other developments are likely to be sold at even higher prices.
“We are having a huge shortage of space and very high demand, and landlords are only making the most of it,” said Mr Simon Hill, the Asia-Pacific director for consultancy firm Savills. The shortage of prime office space is expected to persist until 2009 or 2010, when several new office buildings will be completed.
Analysts said they don’t expect the property prices to fall significantly anytime soon.
“As long as there is no major shift in the economy, no major collapse, Singapore is well positioned for now,” DBS Vickers analyst Wallace Chu said.
Source: Weekend Today, 09 June 2007