Hi-tech rents, occupancy rates up

Hi-tech rents, occupancy rates up

Insufficient and expensive offices drive tenants to business parks, leading to 6.8% rise q-o-q


RENTS and occupancy rates for hi-tech and business park space were lifted in the second quarter of this year by spillover demand for office space, property consultants say. And rents for factories and warehouses have edged up too.


According to CB Richard Ellis (CBRE), the average island-wide hi-tech monthly rent rose 6.8 per cent quarter-on-quarter to $3.15 per sq ft (psf) in Q2. Year-on-year, the increase was 34 per cent.


Insufficient and increasingly expensive office space is driving tenants to hi-tech space or business parks, CBRE said in a statement yesterday.


Jones Lang LaSalle (JLL) also says that companies are relocating backroom operations to hi-tech space. Its latest figures show that the average island-wide hi-tech rent rose 2.4 per cent quarter-on-quarter to $4.25 psf per month in Q2. Compared with a year earlier, the increase was 63.5 per cent.


While figures from both property consultants indicate rising rents for hi-tech space, the degree of increase differs.


‘The disparity is a result of differences in the basket of properties that research houses use to track the market,’ said JLL’s head of research (South-east Asia) Chua Yang Liang. ‘This difference is more pronounced in periods when segments of the market respond differently to external stimulus.’


CBRE says that for business parks, the average occupancy rate was 88 per cent at end-March and could have exceeded 90 per cent by the end of Q2. This would be a new peak.


The firm’s director of industrial and logistics services, Bernard Goh, says that rents at business parks also rose in Q2.


More business park space will be coming on stream. According to CBRE, Biopolis Phase III will be completed in Q4 2009. And JTC Corporation launched a tender for Plot 61 in Changi Business Park last month.


For factory space, the average monthly rent for a ground-floor unit rose 3.3 per cent to $1.55 psf in Q2, says CBRE.


The average capital value of ground-floor units in 60-year leasehold strata-titled factories edged up about 3 per cent quarter-on-quarter to $302 psf.


Ground-floor units in warehouses registered a 3.3 per cent increase in average monthly rent to $1.55 psf in Q2.


Rising raw material costs, a stronger Singapore dollar and weakening demand for exports have made manufacturers cautious about their outlook, dampening demand for factories and warehouses, says CBRE.


‘However, the government has reiterated that the manufacturing sector will remain important to Singapore’s economy,’ it says. ‘As such, manufacturers are still encouraged to set up their facilities on the island, and demand for industrial space is expected to remain healthy.’


CBRE points out that recently there have been few purchases by industrial REITs, as funding availability has dropped. According to Mr Goh: ‘The limited credit supply is likely to continue to curtail the ability of the REIT players to expand their respective portfolios, but on the whole, industrial properties continue to remain an attractive asset class for institutional investors.’


Source: Business Times


Mapletree full-year earnings dip 3%

Mapletree full-year earnings dip 3%

But operating profit rises 35%; revenue jumps 69% to $365.6m


MAPLETREE Investments posted a 3 per cent dip in net earnings for the year ended March 31, 2008 to $1.04 billion because of lower net revaluation gain and higher net finance cost.


Operating profit, however, rose 35 per cent to $146.9 million on the back of first full-year contributions from VivoCity and St James Power Station (SJPS) and maiden contribution from The Beacon, a residential project at Cantonment Road.


The fully owned subsidiary of Temasek Holdings also achieved much higher occupancy and rental rates from all its investment properties across the board.


Revenue jumped 69 per cent to $365.6 million with VivoCity and SJPS contributing a total $99.5 million and The Beacon contributing $47.5 million.


The Temasek unit booked a net revaluation gain of $879 million (after deferred tax provision) for the latest financial year, lower than the $971.2 million in the preceding year.


Mapletree chairman Edmund Cheng said the group is exploring several mixed-use commercial projects in Vietnam (in Ho Chi Minh City, Hanoi and the provinces abutting them). ‘In line with our business model, we will seed these projects with our own balance sheet, and will consider the possibility of starting a Vietnam-focused fund once we have achieved a significant asset size,’ he said in his message in Mapletree’s latest annual report.


Elsewhere in the report, the group revealed it is ‘in the advanced stage of evaluating several projects comprising a wide spectrum of property types, from office, retail, residential, to industrial and service residential properties, with a view to seed a new Vietnam fund with these assets over the next few months’.


When asked, Mapletree’s spokeswoman said the Vietnam fund will be started within the next 12 months but this will depend on market conditions in Vietnam. The fund size will be at least US$500 million.


Mapletree’s real estate assets, both owned and managed, stood at $8.9 billion as at March 31, 2008, up 59 per cent from $5.6 billion a year earlier. Of these, its third-party assets under management (AUM) amounted to $3.1 billion, an increase of 94 per cent, while the group’s owned assets grew nearly 45 per cent from $4 billion to $5.7 billion.


Fee income, excluding fee income from associates, grew 40 per cent last year. The group’s AUM and fee income will be boosted significantly in the current financial year from the Mapletree India-China Fund launched in April this year and a new Mapletree-Arcapita Bank fund formed to hold the $1.7 billion portfolio of properties acquired from JTC Corp.


In an interview with BT in April this year, Mapletree CEO Hiew Yoon Khong projected the group’s total assets could hit $15 billion to $20 billion in a year.


The India-China fund has secured a US$600 million commitment at the initial closing and is currently marketing its second closing with a target to secure a total commitment of US$1.5 billion.


In Singapore, the group is developing Mapletree Business City, an office and business park with 1.7 million sq ft of total net lettable area and slated for completion in second-half 2010.


It is also developing a 19-storey Grade A office building at Anson Road called Mapletree Anson, which is expected to be ready in mid-2009. These two assets could be potentially sold at some point to the proposed Mapletree Commercial Trust.


This trust was to have been listed here earlier this year holding about $3 billion of the group’s assets in the HarbourFront and Alexandra Precincts with VivoCity as the anchor asset. However, the launch has been deferred due to unfavourable stock market conditions.


Source: Business Times

Business parks and high-tech sites gaining popularity

Business parks and high-tech sites gaining popularity


BUSINESS parks and other high-tech industrial sites in Singapore have become increasingly popular among eligible tenants.

According to a new report released yesterday by CB Richard Ellis (CBRE), the overall occupancy rate at business parks probably hit a new high of 90 per cent last month, up from 88 per cent in March.


To rent space at sites like Changi Business Park, prospective tenants must meet certain criteria. These include carrying out research and development work.


Rental rates at these high-tech spaces are heading north. The rates may be cheaper than ultra-high-tech business parks and prime office space, but they were expected to have risen 6.8 per cent last month to $3.15 per sq ft per month from the first quarter.


The popularity of these sites, the report said, was due to the ‘limited availability and continued rental increases’ of office space in the Republic, although the dizzying upward spiral in rental rates had abated in recent months.


Nevertheless, prime office spaces can cost upwards of $16 per sq ft per month – far more expensive than in business parks.


Last year, prime office rents nearly doubled on the back of tight office space and a strong demand from occupiers, including global financial institutions expanding their operations in Singapore. This was on top of the 50 per cent-plus rise that prime office rents registered in 2006.


More business park and other high-tech sites are being built in Singapore. Recently, two business park sites in one-north were awarded.


Biopolis Phase III, which will have a gross floor area of 41,505 sq m when completed late next year, is being built by Crescendas Bionix.


Solaris, formerly known as Fusionopolis Phase 2B, will be built by Soilbuild Group Holdings. When completed by June next year, Solaris will have a gross floor area of 50,271 sq m.


Industrial landlord JTC Corp has also launched a new ‘concept and price’ tender at Changi Business Park.


This site will have a maximum gross floor area of 47,006 sq m, of which 40 per cent is designed for hotel and retail use. The tender will close next month.


Source: Straits Times

Business park occupancy rates may hit new high

Business park occupancy rates may hit new high


SINGAPORE : Business parks are set to see occupancy rates go beyond 90 per cent by the end of June this year to hit a new peak, according to property consultants CB Richard Ellis (CBRE).


At the end of March, the average occupancy rate for business parks stood at about 88 per cent.


CBRE said office space shortage and persistent rent increases are driving office tenants towards industrial properties.


This has pushed up business park rents by an average of 30 per cent since the start of the year.


During the second quarter, two business park sites at one-north were awarded, which will add over 90,000 square metres of space by the end of 2009.


Source: Channel NewsAsia

Singapore Expo to beef up services, facilities

Singapore Expo to beef up services, facilities




THE Singapore Expo Convention and Exhibition Centre is introducing new services and facilities to boost efficiency and attract bigger groups of visitors.


One initiative is a porter service – Porter Xpress – at the Expo’s business centre. The service will transport luggage to the airport from hotels or the Expo for business executives and meetings, incentive travel, conventions and exhibitions (MICE) participants with late flights.


Additionally, in conjunction with media partner At-life, advertisements will be broadcast on LCD TV screens at the Expo, some food outlets and ferry terminals. The screens will allow organisers to publicise events to more than two million viewers monthly.


Free Wi-Fi is available at selected areas of the Expo, with wireless connectivity for 3.5G mobile phones. But 3.5G wireless broadband service users will have to buy a SIM card. Four digital information kiosks will also be installed at the Expo.


In June, JTC Corporation launched a concept and price tender for the development of a 4.7 hectare integrated business park project with retail and hotel components at Changi Business Park, which is near the Expo.


The hotel will make accommodation more convenient for overseas exhibitors and visitors attending events.


Proposals for the tender have to be in by Aug 19. According to the tender document, bidders may opt for either a term of ’30 years with an option for a further term of 30 years’, or 60 years.


Source: Business Times

Spring’s Bt Merah HQ for sale

Spring’s Bt Merah HQ for sale


Wednesday • July 2, 2008


SPRING Singapore is putting its headquarters up for sale ahead of a possible move to the second phase of Fusionopolis at One North.


The Government’s enterprise development agency hopes to then lease half of the building’s units :back for the next two years for its roughly 300 employees while its new headquarters is being built.


While no deal has been signed for Fusionopolis, it is understood that Spring Singapore will be located alongside other Government agencies at Fusionopolis such as the Economic Development Board and A*Star.


International property consultancy Colliers International has been hired to help find a buyer for the 22-storey :Spring Singapore building at Bukit Merah Central (picture). The building has a gross floor area of 198,744 sq ft and is almost fully occupied. James Cook University is another big tenant.


The Urban Redevelopment Authority will allow the new buyer to use the building for commercial purposes.


“The successful buyer could reconfigure the existing floor layout to maximise the lettable area,” said Colliers executive director Ho Eng Joo. “To achieve maximum returns, investors can also potentially convert thepodium block to retail use.”


Source: Today Newspaper

Spring S’pore Bt Merah building up for sale

Spring S’pore Bt Merah building up for sale


COMMERCIAL development Spring Singapore at 2 Bukit Merah Central will be put up for sale today, with market watchers expecting it to fetch $150 million to $180 million.


The development comprises a 22-storey tower block and a six-storey podium block and stands on an 88,295-sq-ft site with a remaining lease of 75 years.


The Urban Redevelopment Authority has slated the site for commercial use.


Currently close to full occupancy, the development has a total gross floor area (GFA) of 355,153 sq ft and a lettable area of around 198,744 sq ft.


Enterprise development agency Spring Singapore owns the building and occupies about 50 per cent of office space, said a Spring spokesperson. The remaining space is rented out to private sector firms such as training companies.


Spring Singapore will lease back about 50 per cent of the building’s office space after the sale.


Property consultant Colliers International is launching the sale via an expression of interest exercise.


Its executive director of investment sales Ho Eng Joo said: ‘The property is currently yielding a net lettable area of close to 60 per cent of the GFA. The successful buyer could reconfigure the existing floor layout to maximise lettable area.’


The buyer could convert the podium block to retail use to maximise investment return, he added.


‘The existing office supply crunch – coupled with an upward spiral in office rents – has resulted in an increasing number of tenants seeking alternative commercial space in fringe CBD areas . . . We expect to see keen interest for the subject property.’


Cushman & Wakefield’s managing director Donald Han also noted that investors are capitalising on spillover demand for office space in suburban areas.


According to Colliers International’s Mr Ho, average rents in the Spring Singapore building range from $3 to $3.50 per sq ft (psf) per month, and could increase to $4 to $5 psf per month upon lease renewal.


But Chesterton International’s head of research and consultancy Colin Tan believes market sentiment has cooled and office rents could contract significantly in 2008 and 2009.


He believes that the selling price for the Spring Singapore building could be at the lower end of $150 million-$180 million, but will depend on what leaseback rental arrangements are.


Savills Singapore’s director of marketing and business development Ku Swee Yong notes that the development may fetch around $160 million.


Interested parties have until July 29 to submit offers to Colliers International.


Source: Business Times