Lack of new office supply in Singapore will likely push prime office rents up by 69 percent for the next five years.This was the forecast made C Y Leung, Chairman of real estate consultancy DTZ Debenham Tie Leung, during a panel discussion during the Forbes Global CEO conference on Monday.And he predicted that Asia will attract many more foreign names which have absent from the region so far.
Prime office rents in Singapore have risen some 15 to 20 percent so far this year but DTZ predicts that till 2010, rents are expected to increase by an average of 10-11 percent annually.
And the property consultancy firm says the booming property sector in Asia will attract even more investment dollars.
C Y Leung, Chairman, DTZ Debenham Tie Leung, said: “Movement of funds within Asia and from other parts of the world, particularly from Europe and America into Asia is a relatively recent phenomenon, unlike movements of funds within Europe and between Europe and America. It is an emerging trend but we seeing the pick-up very significantly and very fast. We are seeing names which hitherto were not part of the scene in Asia and now they are buying in a big way.”
DTZ says more names are expected to surface.
Foreign names have been involved in many high-profile property deals in Singapore, like US-based Colony Capital in the $1.5 billion Raffles Hotel deal, Australian Lend Lease awarded the Somerset Central site and Hong Kong-based Park Hotel Group putting in the top bid for a hotel site.
But consultants say many more are eyeing Singapore including CitiCorp Property Investors.
Looking ahead, DTZ sees a clear demarcation between property investors and developers.
C Y Leung said: “Developers who use their core competencies to source sites, to engage professionals to put their concepts into reality and to find tenants and manage tenant mix and so on. This will be the key competencies of developers whereas funds will exercise their core competencies of raising and raising efficiently funds to hold on to investments. This divorce of functions is not dissimilar to the divorce of functions between development and construction.”
Currently, major Singapore property developers like City Developments and CapitaLand also own sizeable investment properties.
Source: Channel NewsAsia, 04 September 2006