S’pore: costliest industrial spot in Asia ex-Japan

S’pore: costliest industrial spot in Asia ex-Japan


It rises 2 notches to take 12th place in the world


SINGAPORE has risen two notches to become the 12th most expensive industrial location in the world.


And excluding Japan, which is ranked third in the world, Singapore is the most expensive location in Asia, surpassing Hong Kong (23rd), Mumbai (26th) and Taipei (36th).


Average net rents are now at $1.70 per square foot a month after rising 26 per cent year-on-year (y-o-y) last year. Total occupancy cost was US$14.64 psf a year at end-December 2007.


Singapore was also the eighth highest in terms of y-o-y rental increase as reflected in Cushman & Wakefield’s (C&W) report, Industrial Space Across the World, which covers 138 global locations.


On industrial rents here, C&W (Singapore) managing director Donald Han said that demand rose across all segments including manufacturing, warehouses and business parks. The latter, in particular, gained from the spillover effects of the office space crunch in the CBD.


As a result, Singapore moved up two places to become the 12th most expensive industrial location in the world.


Mr Han believes the outlook for rental increases for industrial space here remains bullish.


He said: ‘In the past 12 months, we saw the opening of the KPE and Terminal 3 besides other initiatives that are under construction such as the Circle Line MRT. All these will help to raise the attractiveness of industrial parks located in the peripheral areas and along with it, the rentals.’


London (near Heathrow) remained the most expensive industrial location with a total occupancy cost of US$28.91 psf a year followed by Dublin at US$21.81 psf. Oslo, with a total occupancy cost of US$18.32 psf took fourth place.


Despite European cities accounting for seven out of the top 10 locations in the global ranking, regional growth in Europe was slowest of all the global regions at just 2.5 per cent last year.


However, while Western Europe saw average rental growth of 1.3 per cent, Central and Eastern Europe increased by 7 per cent with the key locations being Poland, the Czech Republic and Romania.


In Asia, Mumbai moved up 11 places to 26th position. It also saw the highest rental increase of 94.44 per cent y-o-y followed by Istanbul (60 per cent) and Bogota (54.2 per cent).


Source: Business Times

Swiss bank takes up bulk of new block

Swiss bank takes up bulk of new block


EFG Bank leases 52,000 sq ft for the next 6 years, with naming rights




SWISS private banking group EFG Bank has leased 52,000 square feet or two-thirds of a nine-storey office block coming up opposite Parliament House.


EFG has naming rights for the freehold building, which is expected to be ready in the first quarter next year. It is being developed on the former Satnam House and Amar-raj House sites by a unit of RB Capital, which is headed by 25-year-old Kishin Hiranandani, son of Raj Kumar of the Royal Brothers Group.


EFG Bank’s lease is said to be for an initial term of six years, with an option to renew for a further three years.


Chris Archibold, head of markets at Jones Lang LaSalle, the property’s marketing agent, said that EFG would pay a ‘low double-digit’ gross monthly rental.


RB Capital, which is a separate and distinct company from the Royal Brothers Group, is negotiating with several interested parties to lease out the remaining space in EFG Bank Building, which will have a total of 78,000 sq ft net lettable area, including retail space in the basement and ground level.


Mr Hiranandani, director of RB Capital, said that his company would be moving into the property to make it its Singapore headquarters. RB Capital owns and develops commercial and residential properties in Singapore and Malaysia. The new EFG Bank Building marks the company’s first foray into property development in Singapore.


JLL‘s Mr Archibold said that the leasing deal with EFG Bank reflects that ‘demand for office space among players in the financial industry is still going strong’.


EFG Bank Building, designed by RSP Architects, will have a North Bridge Road address and an entrance that will be opposite Parliament House.


The bank is leasing seven floors in the building.


EFG Bank Singapore managing director Kees Stoute said: ‘The new premises will meet the expansion needs of the bank. We are also very happy with the location, panoramic views of the city skyline as well as the prestigious address, since it’s just opposite Parliament House.


‘The 52,000 sq ft we’re taking in the new building developed by RB Capital is more than three times the size of our existing premises.’


The bank currently leases a total of about 15,000 sq ft at two locations – the entire 42nd level of OUB Centre at Raffles Place and the 10th floor of 55 Market Street. These leases expire in June 2009 and April 2010 respectively.


Mr Stoute said that the bank had not decided whether it would give up its existing premises when the leases run out. EFG Bank has a headcount of 105 in Singapore, of which 56 are client relationship officers (CROs). ‘Across Asia, the business maintained the strong progress of recent years in 2007, with income growing by over 50 per cent and CROs increasing by more than a third.’


RB Capital bought Satnam House and Amar-raj House next door for a total sum of about $50 million last year.


The new development could be worth around $215 million, assuming a price of about $2,750 psf of net lettable area, according to JLL regional director and head of investments Lui Seng Fatt.


Source: Business Times

Office demand unaffected by global credit crunch

Office demand unaffected by global credit crunch


No threat of financial sector redundancies: URA


(CANNES, France) The credit crunch has so far failed to dent demand for office space in Singapore or derail its bid to become Asia‘s leading financial centre, a senior member of the city-state’s Urban Redevelopment Authority (URA) told Reuters.


Speaking at the annual MIPIM trade fair in Cannes on Tuesday, Choy Chan Pong, head of land administration at the URA, said that Singapore had not felt the threat of vast financial sector redundancies and its construction boom continued.


‘We have not seen any evidence of a decline in demand for office space, and for now most financial institutions in Asia are still hiring,’ he said.


The URA said earlier this week that it planned to double the size of Singapore‘s Marina Bay financial district to 2.82 million square metres – or twice the size of London‘s Canary Wharf financial district – as international financial sector occupiers continued to seek presence in the city.


The authority had set aside 101 hectares of green parkland directly adjacent to the Marina Bay financial district that would serve as ‘lungs’ for the city, and which would never be sold for office schemes, at any price.


‘We have had offers from several Middle Eastern developers and investors to buy the land we have allocated for the Marina Gardens but we will never sell it,’ Mr Choy said. ‘It stops Singapore from becoming a concrete jungle. It is priceless.’


Standard Chartered Bank and DBS Bank have agreed to take a total of 111,500 square metres of space at the Marina Bay Financial Centre, a 438,000 square metre office and residential project being developed by Keppel Land, Cheung Kong Holdings/ Hutchison Whampoa and Hongkong Land.


According to data from global property broker Cushman & Wakefield last month, Singapore prime office rents climbed 78 per cent in local currency terms in 2007 but Mr Choy quelled fears that this surge in rental costs had begun to price some occupiers out of the market, and towards rival markets of Tokyo and Hong Kong.


‘You have to remember this rental increase was from a very low base. Singapore is still cheaper than Hong Kong . . . and Tokyo is almost full,’ Mr Choy said.


Hong Kong is the second most expensive office market in the world, behind London, with annual office rents averaging US$239 per square foot. Tokyo is in third place with annual office rents at US$210 per square foot. Singapore is in seventh place.


Its annual office rents average US$130 per square foot.


‘We do not expect financial institutions will have to choose one market over another, so we have no concerns about growth of China or Japan,’ Mr Choy said..


‘Realistically, banks know they have to be in all three cities because we serve different markets, and if banks want access to India or South East Asia, they need to be in Singapore.’


Source: Business Times

M&As may change credit ratings of S’pore Reits: Fitch

M&As may change credit ratings of S’pore Reits: Fitch


(HONG KONG) The credit ratings of Singapore property trusts may change because of expected mergers and acquisitions, said Fitch Ratings. It believes there may be transactions among the city-state’s real estate investment trusts in the near to medium term, according to a statement it released yesterday. Local trusts including Allco Commercial Real Estate Investment Trust and Macquarie MEAG Prime Reit have said they may sell assets.


The global credit crunch sparked by US mortgage defaults may restrict the access of bidders to funding and reduce international investor interest in Singapore‘s real estate market, Fitch said. ‘Global issues such as access to equity and debt funding may impact the ability of Singapore Reits to take advantage of any acquisition opportunity and will certainly limit the number of any interested parties in any asset disposals,’ Fitch analysts led by Hong Kong-based Stan Ho wrote.


Macquarie MEAG, the owner of stakes in two Singapore downtown malls, said biggest shareholder Macquarie Real Estate last month received ‘unsolicited offers’ for its 26 per cent stake. Allco Commercial, Allco Finance Group Ltd’s Singapore-traded property trust, said on March 9 it may sell its Australian assets, which include Perth‘s Central Park office tower and Centrelink Headquarters in Canberra. The properties are valued at A$483 million (S$621 million), according to the trust.


Moody’s Investors Service said on Feb 26 it might downgrade Macquarie MEAG’s rating as the trust’s review of assets raises ‘considerable uncertainty’ about its asset profile and ownership structure and jeopardised Macquarie MEAG’s progress in refinancing S$235 million of maturing loans. About 80 per cent of those loans come due in May, according to Moody’s.


Macquarie MEAG’s senior unsecured debt is rated Baa2, the second-lowest investment grade, by Moody’s\. \– Bloomberg


Source: Business Times

Mega cruise ship terminal ready in 2010

Mega cruise ship terminal ready in 2010


By Lim Wei Chean


SINGAPORE is powering up its cruise business with a second terminal at Marina South capable of berthing the world’s largest ocean liners.


It will be ready in 2010, giving it a two-year jump-start over competitor ports such as Hong Kong, which is also constructing new berths.


The Singapore Cruise Centre at HarbourFront had close to one million people passing through it last year, about 10 per cent more than the year before.


The proposed International Cruise Terminal, with two berths, will help Singapore meet its 1.6 million cruise passenger target by 2015, said Singapore Tourism Board chief Lim Neo Chian on Tuesday, at the annual Seatrade Cruise Shopping Convention in Miami in the United States.


Talk of a new terminal has been in the air for at least a decade when it became clear that the HarbourFront site was unable to host premium ocean liners like Royal Caribbean Cruises’ Rhapsody Of The Seas that sailed into Asia for its inaugural journey last December.


Every year, HarbourFront receives 500 calls from ships which fall below the 52m height restriction to get under the Sentosa cable car lines that cross the bay.


Passengers of top-end liners, which can reach a height of over 70m, now have to disembark at the Pasir Panjang Container Terminal – a less than stylish welcome to Singapore.


Last year alone, the container port was used by cruise ships about 25 times due to berthing shortages or size restrictions.


Mr Melvyn Yap of Silversea Cruises, said passengers spend as much as US$100,000 (S$138,592) on round-the-world cruises.


He said: ‘It just does not reflect well when the first view these high-end customers get of the country is the container port, does it?’


Without a second terminal, Singapore risks falling behind in the race for Asian cruise passengers, which is expected to hit 2.02 million by 2015, according to Ocean Shipping Consultants.


Source: Straits Times

No major property launches expected in the next 3 months

No major property launches expected in the next 3 months


Kuwaiti pullout from $818m deal, low top bid for Jurong West site unnerve market


By Joyce Teo


MAJOR residential property launches are unlikely for at least three months after the already nervous market was spooked by two sobering events this week, market analysts said.


The first was the pullout of a Kuwaiti investor, Kuwait Finance House, from an option to buy $818 million worth of 97 units at Goodwood Residence.


The second was when the top bid by a property developer for a Jurong West landed housing site came in at less than half what had been expected.


Market sentiment was already jumpy given general market uncertainty, in the wake of the United States sub-prime crisis.


Developers were already saying they are prepared to delay their launches. Property consultants now do not expect any major condominium launches in the next three months. Some developers could even postpone their launches indefinitely, they said.


Still, prices are generally holding steady for now and smaller players will still launch small projects in the months ahead.


Industry sources speculated that Kuwait Finance House had pulled out as it had bought the units at a very high price that could not be supported by the current market.


As for the Jurong West site, sources said the low bid of $78 per sq ft of land area reflected rising building costs and current sentiment. If the Government awards the tender, sale prices of below $1 million per unit will fit in well with upgraders’ expectations and needs, they say.


An industry source said: ‘The Kuwaiti pullout is bad news but it’s not as if things have suddenly changed drastically.’ The fundamentals in Singapore are intact but sentiment has deteriorated, he said.


‘There are people who have money to buy but they just want to wait and see.’ With buyers and sellers largely waiting on the sidelines, there is little action.


Developers prefer to err on the side of caution and even if they offer homes for sale, they are doing it quietly, sources said.


Indeed, so far this year, the 405-unit Waterfront Waves in Bedok Reservoir has been the only new major condo launch. A few blocks have been launched and 110 units have been sold.


Small, quiet releases include the 47-unit Cosmo in Guillemard Crescent and some projects in Telok Kurau. Despite the sluggish market, some of these small projects such as Cosmo and Suites@Owen in Owen Road have sold well.


A consultant said: ‘There are foreign funds and investors still in the market that are on the lookout for bulk condo purchases.’


Among high-end properties, a fund recently agreed to buy – at a discount – the remaining units at Grange Infinite, sources said. The 68-unit freehold condo in Grange Road has more than 40 units left.


There is no lack of high-end condo projects – with quite a few ready or nearly set for launch.


These include Far East Organization’s Silversea in Amber Road, UOL Group’s Breeze by the East in Upper East Coast Road, and City Development’s condo project in Thomson Road.


But financially strong developers are likely to delay launches to the second half, said a consultant.


While the bigger players may not act soon, Evan Lim & Co’s EL Development is preparing to launch its 51-unit Parc Centennial in Kampong Java Road soon.


‘Not everyone can hold back their launches for a long time,’ said another consultant. ‘But nobody is ready to lower their prices yet.’


He added: ‘There’s the possibility of prices falling but I haven’t seen people panicking.’


In the short term, prices are likely to remain flat.


‘It is good for the property market to have a sustainable and affordable price level for the mass market,’ said a property developer. He added that demand as well as unprecedentedly high construction costs were problems.


Source: Straits Times

S’pore job market expected to stay upbeat

S’pore job market expected to stay upbeat


By Ong Bi Hui


STOCK markets are spouting loads of gloom and doom right now, but it is a good time to enter the job market, according to an expert from recruitment specialist Robert Walters.


Regional director Mark Ellwood said multinational corporations still see Asia as a key growth area and will keep hiring, despite gathering concerns about the United States economy.


However, he said Singapore might not enjoy the same sterling employment figures it did last year, given the US downturn, which has begun to affect Europe as well. If recession strikes China and India, Asia might experience negative job growth, he added.


Singapore‘s job market will remain upbeat, he believes, with the highly competitive finance sector enjoying the greatest increase in salaries. Firms are willing to pay a 20 to 25 per cent premium to entice talent into jumping ship.


One reason is that Singapore has become a source market for talent from banks in China, India and the Middle East.


There is a job boom in procurements, engineering and human resources. Highly skilled workers competent in risk management, sales and marketing, and pricing and costing are also hot property.


The skill shortage seen last year is likely to persist, pushing up wages across all sectors.


Robert Walters attributes this to efforts to promote Singapore as a financial hub. As a result, many global firms have set up regional offices here, which has in turn created demand for skilled talent.


‘It is not often we see a candidate-driven market,’ said Mr Ellwood. ‘Employers now have to offer more attractive packages or counter-offers to retain talent.’


The shortage of local talent has also forced firms to recruit abroad, with overseas hires rising from 5 per cent to 15-20 per cent in the past 18 months in all sectors.


Though talent has usurped the driver’s seat in the current job market, Robert Walters, which recruits mainly for the financial and legal fields, advises against job-hopping as the inability to demonstrate career longevity might work against some people.


Mr Ellwood also believes financial remuneration alone will not be enough to help firms stem the brain drain. Workers are also concerned about the working culture and promotion opportunities.


Source: Straits Times