Singapore has beaten Hong Kong as an attractive place for office tenants, according to a market study released yesterday.
The Republic is ranked 11th in the world based on total occupancy costs, while Hong Kong takes the top spot for having the most expensive office space for the second year running. Tokyo comes in third, after London, said Cushman & Wakefield’s Office Space Across The World 2012 report.
When compared with Hong Kong, rents in Singapore are 38.5 per cent lower than those in the Chinese city, according to the commercial real-estate services firm.
Singapore’s continuing economic growth against a backdrop of global uncertainty has fueled rental growth - its Central Business District (CBD) is the fourth fastest in the world in terms of rental growth, at 24.39 per cent. Beijing is No. 1 (75.3 per cent), followed by Moscow (41.18 per cent) and Shanghai (27.37 per cent).
However, office rents in Singapore have yet to reach the 2008 peak of S$19.47 per square foot (psf), making the market good for both landlords and tenants alike.
In contrast, Hong Kong, with its continued tight supply in office space, has again reached the 2008 peak of HK$125 (S$20) psf.
Said Mr Toby Dodd, country manager for Singapore at Cushman & Wakefield: “Due to new supply entering the market over the next 24 months, in particular Grade A office space, Singapore is in a favourable position for attracting ‘blue chip’ tenants.
“With many multinationals looking to Asia-Pacific for growth, Singapore is setting itself in pole position against Hong Kong.”
Mr Dodd added: “For growing companies which are looking to expand their business to the Asia-Pacific region, Singapore is the obvious choice, with a better choice of stock without prohibitively high rents.”
The Republic has another edge over Hong Kong: Its efforts to incorporate “green” planning in mega-building structures.
Singapore is the only city in Asia which is ranked “well above average” by the Economic Intelligence Unit’s Asian Green City Index, said Cushman & Wakefield.
As of September last year, about 470 buildings in the country are Green Mark certified, and green buildings are no longer the exception but increasingly the norm in the case of Grade A properties in the CBD.
“Green building features will play a crucial role in boosting the attractiveness to increasingly socially responsible corporate tenants,” said Mr Dodd.
These companies also tend to consider quality of life an important factor. Singapore’s clean air, in contrast with Hong Kong’s air pollution, for example, does make a difference, he added.
The report also found that Asia-Pacific recorded the steepest regional prime office rental increases last year. Overall, rents across the region rose by an average of 8 per cent.
Ms Sigrid Zialcita, managing director for Cushman & Wakefield’s research team in Asia-Pacific, said: “While signs of cooling were certainly evident in the second half last year, broad- based regional economic growth of 5.9 per cent fuelled leasing activity, driven largely by the IT and banking sectors.”
However, rents maintained their downtrend in supply-heavy markets like Seoul, Hanoi and Mumbai.
