Time is ripe for the Singapore government to release additional sites for office development in the H2 2010 Confirmed List to prevent a potential supply crunch, according to some property consultants.
While others think these new office sites must be launched in prime CBD areas like Marina Bay, some analysts suggest the government should also look at city-fringe sites and land near the Jurong East and Paya Lebar MRT Stations, which has been identified for development into new commercial centres.
“We’ll need to be ahead of the curve by getting land through the confirmed list in H2 2010, bearing in mind that it can take up to four years from inception to completing a new building,” said Moray Armstrong, CB Richard Ellis executive director of office services.
“We could be facing a relative shortage of new office space completion in 2013-2014, assuming the current surge in positive occupier demand continues. Slightly more than 50 per cent of the 5 million sq ft-plus of Grade A new office space completing in 2010-2012 is already pre-let.”
“Strong Singapore GDP growth anticipated this year will underpin continued healthy take-up to 2011 and 2012. There are lots of positive employment pointers leading to expansion in office demand. Banks are recruiting vigorously, especially in the private wealth and asset management sectors,” he added.
Angela Tan, head of occupational and development markets at DTZ in South-east Asia, also points out the danger of an escalation in office rents again, if Singapore government does not launch office sites soon as there is a limited number of new large offices completing post-2012. “It’s prudent for government to try and balance business costs as real estate is one of the components of business costs that government can help to contain,” she added.
Most of the office industry players have already declared that office rentals in Singapore have effectively bottomed out in Q4 2009/Q1 2010 and are seeing a 5- to 10-percent increase in Grade A rents this year.
“Forward precommitment rents have probably moved up 15 to 20 per cent above the market bottom in Q4 2009,” said Moray Armstrong, executive director of office services at CB Richard Ellis.