A 38-storey office tower will be built beside OUB Centre, adding some 350,000 square feet of Grade A office space to Singapore’s business district.
Despite growing expectations of falling demand for office space and a slump in office rents, the project’s marketing agent is already talking to interested parties. The S$540 million project is scheduled to be completed in 2011 and is already seeing healthy interest from financial service groups.
Managing director of Singapore & SEA at Jones Lang LaSalle, Christopher Fossick, said, “We see no pullbacks at all. We’re seeing financial service groups still looking for space, still expanding. No evidence at this time that there’s any pull back in financial sector here in Singapore.”
The potential anchor tenants are expected to take up between 25 to 30 per cent of the available office space.
Jones Lang LaSalle expects rents to be in line with rates in the prime area, which range between S$15 to S$20 psf per month.
But not all property players are this bullish on the office segment.
Singapore office rents are seen to have peaked following the almost 100 per cent increase over the past year.
In early September, Merrill Lynch issued a report predicting a fall in Singapore’s Grade A office rents, to S$10 psf per month in 2010.
It expects rents to fall further, to S$8 by 2011, and most analysts agree, especially in light of the financial turmoil in the US.
However, the project’s developers say rental rate softening due to external conditions is likely to be a short-term issue.
General manager of OUB Centre, Henry Kok Moo Yong, said, “This development is for long-term investment. We are confident with the Singapore economy especially with new things coming up like the integrated resort and more demand coming up.”
The new 38-storey tower will complement OUB’s existing building. Together they will be rebranded as One Raffles Place, which also means a name change for the current OUB Centre.
The new building will have environmentally-friendly features like solar panels and rainwater harvesting systems.
Source : Channel NewsAsia – 25 Sep 2008