Office rents rose 2.6% in Q1 as islandwide vacancy eases to 12.5%: URA

SINGAPORE - The Urban Redevelopment Authority's rental index of office space in the central region rose 2.6 per cent in the first quarter of this year over the fourth quarter of last year.

This is the same pace of quarter-on-quarter increase as in the fourth quarter of 2017.

The prices of office space in the central region rose 1.3 per cent in the first quarter, a slower pace of increase compared with the 2.7 per cent rise in the previous quarter.

As at the end of the first quarter of 2018, there was a total supply of about 791,000 square metres (sq m) gross floor area (GFA) of office space in the pipeline, up 32.5 per cent from the 597,000 sq m GFA of office space in the pipeline in the previous quarter.

URA also said that the amount of occupied office space increased by 14,000 sq m net lettable area (NLA) in Q1 2018, compared with the increase of 55,000 sq m in the previous quarter. The stock of office space rose by 11,000 sq m NLA in first quarter 2018, compared with the decrease of 4,000 sq m in the previous quarter.

As a result, the islandwide vacancy rate of office space at the end of the first quarter of this year dipped to 12.5 per cent from 12.6 per cent at the end of the previous quarter.

Source: Straits Times, 27 Apr 2018

Samsung Hub level 20 sold for S$3,550 psf

AN office floor at Samsung Hub along Church Street has been sold for S$46.62 million or S$3,550 per square foot based on its strata area of 13,132 sq ft.

On psf basis, this is the highest in the 999-year leasehold building, which is in the Raffles Place financial district.

A company whose shareholders include an Indonesian was granted an option recently to buy the entire 20th floor of the 30-storey building.

The floor is being sold by Lei Shing Hong Properties (Singapore), part of the Hong Kong-based Lei Shing Hong (LSH) group, which is involved in businesses ranging from retailing premium cars to property development and investment.

The LSH unit had paid S$43.07 million or S$3,280 psf for the floor in February last year.

BT understands that the group had planned to occupy the space and even did some renovations, but later changed its mind. The floor is currently vacant.

The S$3,550 psf for the 20th floor busts the previous high of S$3,500 psf in the building, set on two occasions. The first was back in 2013 during the heyday of the strata commercial property market before the introduction of the Total Debt Servicing Ratio framework; in that deal, a small unit of 883 sq ft on the 17th floor was transacted for S$3.09 million.

That same unit was resold at the identical price last December, along with an adjoining, larger unit of 2,562 sq ft that went for S$3,300 psf or S$8.45 million. The larger unit was previously transacted in 2013 for S$3,200 psf or nearly S$8.2 million.

In the December deals, both units are understood to have been bought by an insurance agency which plans to occupy the space.

The two units were sold by a couple of local companies that used to occupy the units but which handed over the units on vacant possession to the buyer recently.

CBRE director of capital markets Sammi Lim brokered the sales of both units.

She is also handling the ongoing sale of the 20th floor but declined to comment as it is still at an early stage.

BT understands the party that was recently granted an option for the floor's purchase is a Singapore-incorporated company the ultimate shareholders of which are Ryan Kristoffer Silfanus, an Indonesian citizen, and Singaporeans Tan Lu Dong and Ng Soo Tiong

Samsung Hub, which received Temporary Occupation Permit in November 2005, is one of the very few 999-year leasehold/freehold buildings in Singapore's Central Business District offering strata office play to investors.

Source: Business Times, 26 Apr 2018

The Working Capitol to exit Robinson Road


From the outside, it is business as usual at The Working Capitol, the co-working space that occupies 11 of 19 floors at 140 Robinson Road. The freehold commercial tower was developed by WyWy Development and was originally known as Crown @ Robinson. Since The Working Capitol became the anchor tenant, it secured naming rights to the building.

Launched in March last year, the 55,000 sq ft co-working space was the largest in the CBD then. This marked the second location for The Working Capitol, following the success of its flagship space at 1 Keong Saik Road, which was launched in March 2015. The Working Capitol was co-founded by siblings, Ben and Saranta Gattie.

However, just a year after opening, there has been a change of management control over the operations at The Working Capitol on Robinson Road. The master lease at 140 Robinson Road is held by The Working Capitol (Robinson), which in turn, sub-lets the co-working space to members as well as provides them with services in that location.

“Regrettably, we ran into disagreements with the general contractor for the Robinson Road fitout, Tarkus Interiors, and despite months of negotiation and significant payments being made, a winding up application was eventually made and a winding up order was issued against The Working Capitol (Robinson),” says Ben Gattie, CEO of The Working Capitol in an email response to questions from EdgeProp Singapore. “We have since appealed against the winding up order.”

The effect of the winding up order means that control of The Working Capitol (Robinson) has been placed in the hands of Don Ho Associates, who will now administer the business in the interests of the creditors. “For the time being, operations at The Working Capitol on Robinson Road will continue as per usual,” says Gattie.

Avoiding Disruption

However, some members who spoke on condition of anonymity to EdgeProp Singapore are concerned about their membership at The Working Capitol on Robinson Road. “I was recently offered six months rent free by a competitor across the road,” says a member who requested not to be named. “It was a tempting offer, but I’m choosing to stay put.” He took up a hot desk at The Working Capitol on Robinson Road last year as he liked the ”vibrant community” there. He has another six months on his remaining contract at The Working Capitol.

Gattie is aware that some of his members may be unsettled by recent events. “We strongly believe that the best solution for all involved parties would be to secure a strong, well-funded operator focused on Grade A office buildings to manage the operations at [140] Robinson Road,” he says. “This would guarantee the level of service that all our members and tenants deserve while ensuring that the creditors could be repaid in full.”

His top priority is to avoid disruption to members and tenants and to facilitate a smooth transfer of the master lease, he adds. “We have pledged our full co-operation to Don Ho Associates in negotiations with interested parties.”

In fact, The Working Capitol (Robinson) is close to breaking even, with over 70% occupancy. “We remain convinced that the business is viable on a long-term basis, but not necessarily one we are best suited to carry on,” concedes Gattie. “Our forte remains in heritage buildings with a distinctive character where we can contribute to the neighbourhood.”

Creating ‘a Keong Saik campus’

According to Gattie, the situation at The Working Capitol (Robinson) is confined to the premises at 140 Robinson Road. “There is no impact on The Working Capitol operations on Keong Saik Road,” he assures. “With our withdrawal from Robinson Road, we will now devote our full attention to enhancing our services to members at Keong Saik and at our new neighbouring premises at 89 Neil Road.”

Located directly opposite 1 Keong Saik Road, the new project at 89 Neil Road will add another 30,000 sq ft of space in the premises there. Gattie calls the neighbourhood “our Keong Saik campus”. In addition to 1 Keong Saik Road, he has since expanded into the immediate neighbouring units at 3 Keong Saik Road and 120 Neil Road. The addition of 89 Neil Road space will bring The Working Capitol's total operations in Keong Saik area to over 70,000 sq ft. 

Gattie intends to accommodate much bigger teams in the new co-working space there. For instance, about 15,000 sq ft of space on the third floor of 89 Neil Road will house anchor tenants such as a multi-billion-dollar MNC, which has grown from five staff to 16, and now to 90 people. The remaining 15,000 sq ft at 89 Neil Road will be used to expand the offerings for members, including a rooftop event space, new F&B outlets and other lifestyle options. “We are working on some exciting new-to-market concepts, which we hope will further enhance the experience of both our members and our surrounding community,” he says.

Greater differentiation

As the co-working business continues to evolve, there is a greater need for operators to differentiate themselves in terms of industry exposure, experiences, services and communities catered to, says Sulian Claire Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore. “For example, The Great Room has a more luxury hospitality feel compared with the more youthful millennial WeWork vibe,” she says.

Increasingly, there is a convergence of private members club concepts, where like-minded industry leaders congregate to network, collaborate and socialise under one roof, adds Tan-Wijaya. Straits Clan and 1880 are examples of this. “In some cases, there is a certain level of prestige to be associated with a more upmarket members business club,” she says. Therefore, The Working Capitol’s strategy to now focus on its “campus” at the Keong Saik area and create its own feel and community is the way to differentiate itself, says Tan-Wijaya.

Source: EdgeProp, 16 Apr 2018

Cracking the co-working code in commercial real estate


[NEW YORK] Real estate brokers scoff that just a fraction of US office space is occupied by co-working and other flexible workspace options, yet data shows over one-quarter of new leases signed in the past two years came from this burgeoning business.

A double-digit growth rate, driven in large part by the upstart WeWork, indicates co-working is more than a fad as more shared-space providers establish multi-city networks and landlords step into the fray with their own flex-space formats.

Commercial real estate is in flux and no one knows what the industry will look like in a decade, but sitting around won't help the outcome, said Jonathan Iger, chief executive at the family-owned William Kaufman Organization (WKO), founded in 1924, which has launched its own flexible office space concept.

"It's this whole sharing economy that we're all very cognisant of," Mr Iger said, referring to the efficient use of space to lower tenant costs while allowing landlords to charge more per square foot.

Flexible workspace has been growing at an average annual rate of 23 per cent since 2010, according to Jones Lang Lasalle Inc, and including co-working, is now the primary growth driver in the US office market.

Co-working and other flexible workspace formats accounted for 18.1 million square feet, or 29.4 per cent of new space that was leased in the United States over the past two years, JLL said in a February report.

By 2030, flexible space and shared amenity areas will account for 30 per cent of office space, the report forecast.

Co-working got its start from freelancers who needed offices rather than coffee shops and was followed by start-ups that liked how it freed up capital for more hiring and other expenditures. Now large companies are a visible clientele.

But outside of WeWork, bankrolled by Softbank with a US$4.4 billion investment, and flex space leader IWG's Spaces unit, no other co-working firm has established a nationwide US network with dozens of locations. That may soon change.

Serendipity Labs, a Rye, New York-based firm, opened its first co-working site in Manhattan last week and plans more than 125 US openings over the next three years after 18 firms signed area of development agreements, the company said.

Flexible office space provider Knotel has been rapidly expanding its network in New York and San Francisco, while co-working start-up Industrious in February raised US$80 million to double its number of sites to up to 60 this year.


Mr Iger's WKO owns five large traditional Class A, or prime, office towers in Manhattan and rolled out its own flexible format last month called Swivel. The site has meeting room sensors to better understand usage and features a rotating wall to create two rooms from one.

Landlords have been forced to focus on how to maximise space as the massive Hudson Yards development on New York's far west side rises with its efficient floor plates.

"When you read about Hudson Yards versus older stocks of buildings like my own, it's about the density, the additional bathroom, the column-free spacing, which all is a way of saying we can put more people on the floor than you can," Mr Iger said.

By moving the reception, pantry, conference room and lounge into an area shared by five tenants, the Swivel layout slashed the space a tenant takes by roughly 30 per cent and also its rent by the same percentage, Mr Iger said.

The new floor plan WKO installed at its century-old converted warehouse in New York's Meatpacking District allows firms to increase their workforce by about 50 per cent, he said.

Taking a cue from co-working firms, the commercial real estate standard of pricing space by square foot has been dropped, he said.

"We're no longer looking at this on a price-per-square foot basis," he said.


Serendipity Labs' rollout is a franchise model that draws partners mostly from the hotel industry who have signed area of development agreements for the suburbs or secondary markets, said John Arenas, founder and chief executive.

The franchisee commits between US$1 million and US$1.5 million, depending on a location's size, and will operate several sites within its area of operation, the company said.

"We're targeting hospitality operators, those who own and operate hotels," Mr Arenas said, noting the company owns sites in Manhattan and Chicago. "They see workplace hospitality today as they saw the maturity of the hotel business 20 or 30 years ago. They're getting in early," he said.

Maximum Hospitality, a franchisee of Serendipity Labs in Nashville, Tennessee, already has marketing, accounting, legal and sales teams for the hotels it manages, Mr Arenas said.

"The corporate culture of other companies is really a landlord-tenant culture, whereas our culture is a guest-member service provider culture," he said.


Source: Business Times, 19 Mar 2018

IOI Properties removes HK Land as partner for prime CBD project

IT looks like Malaysia's IOI Properties will remain solely responsible for the mixed-use development in Singapore's prime business district, after terminating the agreement with HongKong Land to jointly develop and manage the project.

But the news did not sit well with market watchers, who deemed it a negative surprise that would stretch IOI Properties' net gearing. It also sent shares of the Malaysian developer to a two-year low on Wednesday.

IOI Properties had said on Tuesday that the termination will not impact the development of the Central Boulevard site and that it is confident of completing the project.

Provisional permission from the Urban Redevelopment Authority (URA) was obtained in February this year to commence development works on the land parcel at Central Boulevard; the tender for the piling works has been awarded and construction has already commenced.

The termination of agreement with Hongkong Land was due to "non-fulfilment of certain conditions precedent", IOI Properties explained in a regulatory filing with Bursa Malaysia on Tuesday.

Under the memorandum of agreement inked between the two firms in June last year, conditions that had to be met by March 12 this year include obtaining remission approvals for additional conveyance duties and additional buyer's stamp duty, approval from URA, lenders' approval, and approval from Bank Negara Malaysia.

IOI Properties did not specify which of these conditions were not met yet nor did it respond to queries from The Business Times by press time. Hongkong Land also declined to comment.

Hong Leong Investment Bank analyst Lee Meng Horng said: "We are negative on the news as we opine the joint venture with Hongkong Land would complement IOI Properties well in the development given their wealth of experiences managing prime office assets and also ease the balance sheet burden of IOI Properties in undertaking the entire project."

IOI Properties' unit Wealthy Link had in November 2016 secured the white site at Central Boulevard for a whopping S$2.57 billion or S$1,689 per sq ft per plot ratio. Under the memorandum of agreement inked with Hongkong Land in June 2017, the latter was supposed to take up a 33 per cent stake in the project.

"Without the contribution from HongKong Land, we expect IOI Properties' net gearing to be stretched and will inch up closer to 0.8 times from the current 0.6 level with the estimated development cost in the region of S$700-800 million," Mr Lee said.

MIDF Research, part of Malaysian Industrial Development Finance Berhad, revised its target price for IOI Properties to RM1.89 from RM2.09, as it raised the discount to revalued net asset value to 53 per cent from 48 per cent on concerns over rising net gearing.

Shares of IOI Properties fell 2.2 per cent on Wednesday to RM1.77, marking a two-year low. A day before, IOI Properties had said that it was confident that it would be able to proceed with and complete the proposed development.

The scheme for this 1.1-ha site comprises two office towers of about 1.26 million square feet of leasable space and a small retail podium of about 30,000 square feet.

The site is adjacent to One Raffles Quay and close to Marina Bay Financial Centre - both properties developed by Cheung Kong, Hongkong Land and Keppel Land. This is why analysts were hoping that with Hongkong Land's involvement, direct underground and overhead links can be built to adjoining buildings, thus enhancing the value of the development. (see amendment note)

IOI Properties had, in the past, tied up with Ho Bee Investments to develop two condominium projects on Sentosa Cove and teamed up with City Developments Ltd in the mixed-use project, South Beach. It has sold 95 per cent of its 755-unit condominium project in Clementi called The Trilinq.

The Malaysian developer has not solely developed commercial projects here, though it has extensive experience in developing commercial, residential and integrated township projects in Malaysia.

One industry source said that the termination of agreement between the two companies could be due to differing views on the market and how to position the scheme.

There were also technical constraints concerning the site, he said. "The marriage of the two parties was surprising in the first place. The URA approval has also taken longer than expected."

According to the March 12 issue of The Edge Malaysia weekly, IOI Properties was believed to have reached long-term financing deals with five banks to the tune of S$1.6 billion.

Source: Business Times, 15 Mar 2018

Singapore's strata office market gains momentum

Source: CBRE

Source: CBRE

The market has room for growth in terms of sales volume and prices.

THE strata office market seems to be rousing in the last half a year. While the sales volume and pricing are still lower than the pre-TDSR period of 2013, activity seems to have steadily returned since 2015. At the peak of its cycle in 2012, property sales of strata-titled offices were at an all-time high with a record S$2.29 billion worth of new and resale strata offices traded - almost three times more than the sale transactions of S$760 million in 2017.

The market then was dominated by a 70-30 ratio of investors to end-users at that point in the cycle. Ready credit enticed many investors to purchase a slice of the office strata investment market. Developers, egged on by the frenzy, used the opportunity to convert whole commercial floors into strata units, parcelled out for sale to investors.

Post-TDSR, coupled with the surmounting pressure on rents and supply looming, investors began to shy away from the office strata market. With credit conditions tightened, the ratio of investors to end-users shifted to the converse, with end-users now making up 70 per cent of the buyers and investors the remaining 30 per cent.

End-users see many benefits to buying a strata office unit. Family offices, and small and medium businesses prefer office strata units to hedge against volatility in the office rental cycles. Singapore's office rents are increasing and will continue to do so for the next few years as the injection of supply slows. Buying an office strata unit locks in long-term operational costs. Renting an office unit subjects them to the risk of a rise in rents during the lease-renewal period.

The office strata market has always been on the radar of both local and foreign investors, namely those from Hong Kong, Malaysia, Indonesia and China in recent years. These investors, mostly family offices, are savvy and are looking to invest in an asset that allows them to preserve their wealth.

Other investors in the office strata market are typically major corporates from a diverse range of industries that span construction, financial and commodities sectors. These firms have established a footprint in Singapore over the years and find it attractive to purchase strata units to complement their regional headquarters nearby.

We expect rents and prices of strata office units to appreciate in the next 12 to 24 months, against a limited supply, which accounts for about 14 per cent of the total commercial office stock in Singapore. Compared to other investor markets like Hong Kong, Singapore's office strata market has room for growth in terms of sales volume and prices. Singapore's market is relatively open, and demand and supply dynamics are balanced. Savvy overseas investors with a strong inclination to purchase real estate will continue to see value in the the strata office market.

Source: Business Times, 10 Mar 2018

Green lung, people-friendly zone new draws of Market St area

Lawrence Wong hopes Raffles Place will not only bustle with workers in daytime, but will also be vibrant at night

THE redevelopment of the former Golden Shoe Car Park will feature a 12,500 square foot public park, Minister for National Development and Second Minister for Finance Lawrence Wong said at a groundbreaking on Friday.

CapitaLand, CapitaLand Commercial Trust and Mitsubishi Estate, which are jointly redeveloping the old carpark, had previously announced plans to turn the site at 88 Market Street, which used to house a popular food centre and carpark, into an S$1.82 billion integrated development.

Besides the public space, footpaths along Market Street, Malacca Street and Phillip Street will be widened with added greenery, along with sheltered linkways along Malacca Street between Raffles Place and other developments. There will also be new cycling paths along these streets, which will connect to upcoming developments planned as part of the Central Area cycling network.

Mr Wong said these moves were aimed at making the area greener, and a "vibrant people-friendly zone". "We hope that Raffles Place will be an area that is not only bustling with the working crowd in the daytime, but will also be a place where people will want to visit to gather and interact at night," he said.

At 280 metres, the 51-storey tower will be among the tallest in the Raffles Place area, and have 350 carpark spaces from levels four to eight. Golden Shoe Car Park had 1,053 carpark spaces.

The former Market Street Car Park had 704 spaces. CapitaGreen, the 40-storey Grade A office tower on the site and which opened in 2015, has 180 parking spaces.

Market Street Food Centre, previously housed in Golden Shoe Car Park, will reopen at the second and third levels . It will be owned by the Ministry of the Environment and Water Resources (MEWR). Currently, stallholders are operating at an interim food centre in Cross Street.

Plans for the new green space, walkways and cycling paths were developed as part of a multi-agency effort by the Urban Redevelopment Authority (URA), Land Transport Authority (LTA) and National Parks Board, in collaboration with CapitaLand, which will implement the enhancement works.

The works are expected to start in 2019, and will be completed by the first half of 2021 along with the integrated development.

With a gross floor area of about one million square feet, 88 Market Street will comprise 635,000 sq ft of Grade A office space; a 299-unit Citadines serviced residence to be managed by The Ascott Ltd; and ancillary retail space. It will also have a sky garden and a "City Room" on the ground floor which can be used for community events.

"We are confident that this integrated development will attract progressive companies seeking a future-enabled environment to grow their business, and attract the best talent," said Ng Kee Choe, chairman of CapitaLand at the groundbreaking.

Moray Armstrong, managing director of advisory and transactions for CBRE said: "The office space will be playing into a strengthening office market that is showing encouraging signs on the demand side."

Source: Business Times, 10 Feb 2018

Market Street to get park, footpaths from Golden Shoe Car Park redevelopment: Lawrence Wong

THE redevelopment of the former Golden Shoe Car Park will feature a 12,500 square foot public park, Minister for National Development and Second Minister of Finance Lawrence Wong said at a groundbreaking on Friday.

Developers CapitaLand, CapitaLand Commercial Trust and Mitsubishi Estate Co, the joint venture partners for the redevelopment, had previously announced plans to turn the site at 88 Market Street, which used to house a popular food centre and car park, into an S$1.82 billion integrated development.

Besides the public space, footpaths along Market Street, Malacca Street and Phillip Street will be widened with added greenery, along with sheltered linkways along Malacca Street between Raffles Place and other developments.

There will also be new cycling paths along these streets, which will connect to upcoming plans planned as part of the Central Area cycling network.

Market Street Food Centre, previously housed at Golden Shoe Car Park, will reopen at the second and third levels.

It will be owned by the Ministry of Environment and Water Resources (MEWR).

Currently, stallholders are operating at an interim food centre on Cross Street.

Source: Business Times, 9 Feb 2018

WeWork set to grow Singapore footprint to over 300,000 sq ft


It is said to have leased space at City House and Mapletree Anson and is in advanced talks for space in Suntec City, 8 Cross Street

US-based co-working space provider WeWork, which launched its operations in Singapore only last December, is set to expand its presence.

The Business Times understands that it has signed up at several new locations - including City House and Mapletree Anson - and is in advanced discussions at others, such as 8 Cross Street and Suntec Tower 5.

If things go according to plan, WeWork's footprint in Singapore would grow to over 300,000 sq ft. When contacted, its spokesman said: "We do not have any announcements at this stage."

Co-working spaces are open-plan office spaces offered to users on a desk-by-desk basis. Facilities such as pantries and meeting rooms are shared. Such spaces are sold by membership on a daily or monthly basis, but some co-working operators are entering into longer-term arrangements with big corporations that may require space for special projects on short notice without having to run up huge capital expenses.

WeWork's space in City House in Robinson Road is said to take up four floors, totalling about 34,000 sq ft on the lower floors of the 23-storey building. This is part of the space now occupied by building owner City Developments Limited (CDL) for its headquarters.

CDL will move its headquarters to the group's flagship office building Republic Plaza in Raffles Place later this year, to take up some of the space vacated by tenants such as Japanese bank MUFG, Itochu and ING, which have moved to newer buildings.

CDL made improvements such as lift upgrades, at City House last year.

At Mapletree Anson, WeWork is leasing a floor of about 20,000 sq ft that Lendlease vacated last year to move to a co-working space in OUE Downtown Gallery in Shenton Way; this move is for the interim, until Lendlease moves to Paya Lebar Quarter. WeWork is close to wrapping a deal to lease the top two floors of Suntec Tower 5, more than 30,000 sq ft in all. The space, which takes up Level 17 and the mezzanine area on Level 18, used to be occupied by UBS. The bank will retain a presence in the same tower, in addition to its premises in One Raffles Quay and Hansapoint in Changi Business Park.

Talk in the market is that WeWork is also in advanced talks to take four floors totalling 60,000 sq ft at 8 Cross Street.

Last month, Frasers Commercial Trust announced that WeWork had committed to a lease of about 28,700 sq ft in one of China Square Central's heritage shophouse blocks. WeWork will take up the space in phases, starting with 16,800 sq ft in the second half of this year.

WeWork, which launched its operations at Beach Centre, opens its second location at 71 Robinson Road this quarter; it will also begin operations next year in Funan's North Office block, where it has leased 40,000 sq ft.

Co-working operators helped to support demand for Singapore office space last year; the trend is expected to continue this year, but market watchers expect a shakeup among the space-providers at some stage. They range from homegrown start-ups to regional players; a handful of international names like Regus and WeWork make up the rest of the field.

JLL's head of Singapore markets Andrew Tangye, commented that the growth in the co-working space sector has been evident in nearly all global cities in the past couple of years. "Interest in this space taps into the trend of more flexible styles of working, fostering greater collaboration and creativity.

"Demand is coming not just from start-ups, but large organisations looking to house some of their teams in alternative work spaces.

"While co-working space has been well received here and demand is expected to grow further, the operators that will be successful and continue to grow are the ones that are able to differentiate their offerings and show value to customers. Those who fail to do so may be able to compete only on cost."

Among the leases tracked by CBRE Research, more than 500,000 sq ft of space in Singapore was signed by co-working operators in 2017.

Michael Tay, the executive director for advisory and transaction in the property consulting group, said: "This sector is going through a phase of exponential growth, which naturally generates concerns about the ability of the Singapore market to absorb this influx of co-working space."

He estimates that about 97 per cent of office occupiers in Singapore are still committed to conventional leases of, say, three or five years.

"In the longer term, the success of this sector will hinge on the ability of co-working operators to succeed in converting occupiers on conventional leases to take up more co-working space."

Source: Business Times, 8 Feb 2018

Singapore office, retail rents to see strong growth over next few years: report


SINGAPORE'S office rental growth is likely to see the strongest overall growth over the next three years, according to M&G Real Estate's latest market outlook on real estate in the Asia-Pacific region.

M&G expects rental growth in Singapore offices to rise at 6 per cent per annum over the next three years, driven by a medium-term grade A supply drought.

Similarly on the retail front, retail rents in Singapore should start to rise by around 1.5 per cent per annum, as both tourism spending and domestic consumer sentiment improve in 2018, M&G said.

"In addition, the positive effects of residential en bloc sales may boost further consumer spending, as sellers cash out and redeploy this money elsewhere," the global property investor said.

It noted however that a potential goods and services tax hike in 2018 or 2019, estimated at 9 per cent by analysts, could restrain spending initially as consumers adjust to this new level.

Lastly, organic growth from e-commerce, coupled with retailers expanding their omnichannel efforts, should drive healthy demand for logistics warehousing, and support stable rental growth in the region, M&G noted.

That being said, there may be some markets that need time to work through existing or new logistics supply where completion levels are high, such as in Singapore and Osaka.

Source: Business Times, 7 Feb 2018