S'pore office costs remain competitive

DESPITE strong demand, the cost of taking up office space in Singapore has remained relatively stable and low, as a significant amount of new supply has been added to the market in recent years.

A survey conducted by property consultancy CBRE has found that Singapore's office occupancy costs are only the 16th most expensive in the world at US$117.39 (S$150) per sq ft per year.

Hong Kong's Central Business District came out tops in the ranking, with occupancy costs of US$248.83 per sq ft per year.

Occupancy costs, as measured by this study, include rent, property taxes and building maintenance costs, among other factors.

At the end of March, office occupancy costs here had risen just 2.6 per cent from a year earlier, CBRE said.

In contrast, office occupancy costs in Beijing's Jianguomen area in its Central Business District surged 49.4 per cent, making it the market with the fastest growth in occupancy costs.

CBRE's executive director of office services, Mr Moray Armstrong, said Singapore's relatively low ranking may be a blessing.

'With office rents expected to ease further... the Singapore office market appears set to retain its cost-competitive edge over many other financial centres and other regional cities.

'In periods of austerity, multinational corporations become even more sensitive to premises costs,' he said.

Add to this the fact that Singapore has benefited from the delivery of a significant volume of new Grade A space, he added.

About 5.4 million sq ft of new office space has been completed since the first quarter of 2010.

'And with more developments in the pipeline, the city has ample space to accommodate occupier space needs, whether driven by growth or upgrading,' Mr Armstrong said.

'There is every opportunity for Singapore to outperform many other global office locations as a focal point for investment, new headquarter set-up and expansion.'

Six of the top 10 most expensive office markets are in Asian cities, CBRE's survey showed.

A second Hong Kong district makes it to the list - West Kowloon. So do Tokyo, New Delhi's Connaught Place and two districts in Beijing - Jianguomen and Finance Street.

London's West End and City, Moscow, and Sao Paulo in Brazil complete the top 10 list.

'The most expensive office locales are increasingly located in dynamic markets across the emerging economies as office occupiers diversify their global footprints in these markets to take advantage of rising incomes and the availability of labour,' said Dr Raymond Torto, CBRE's global chief economist.

'The most expensive office occupier markets also have a diversified economic base, limited available institutional quality space, strong currencies and are increasingly located in urban centres.'

After Beijing's Jianguomen district, the markets with the fastest-growing occupancy costs were Beijing's Finance Street, Guangzhou, and two areas in San Francisco.

Occupancy costs in Hong Kong's Central area fell the fastest in the past year, down 17.2 per cent. Office markets in Abu Dhabi, Greece and Ireland followed, with occupancy costs dropping at least 13.5 per cent.