China Square Central (above), Far East Square, Great Eastern Centre will be integrated to become a precinct called China Place, boosted by new amenities. -- PHOTOS: FRASER CENTREPOINT, BT FILE PHOTO, GREAT EASTERN LIFE ASSURANCE

THREE firms are joining forces to inject more life into a heritage area within the Central Business District (CBD).

Far East Square, China Square Central and Great Eastern Centre are set to be integrated to become a precinct known as China Place, boosted by new retail, entertainment and hospitality amenities.

Far East Organization, Frasers Commercial Trust and Great Eastern Life Assurance unveiled the China Square Precinct Master Plan yesterday.

In a joint statement, the companies said the collaborative effort will ‘revitalise the downtown heritage area and create a vibrant retail, entertainment and hospitality destination, with a mix of old and new urban forms’.

One of the first steps the firms will take is to connect the three properties, by building a $14 million covered linkway that will also be linked to the future Telok Ayer MRT station.

Funds for construction, which is likely to start next month, will be shared equally among the three players.

The project is due to be completed by February next year.

Far East Organization will also build two hotels within Far East Square.

One is a 37-room designer boutique hotel being converted from offices within the conservation shophouses. The other will have 292 rooms, to serve the business community in the surrounding CBD.

China Place, which is close to buildings like OCBC Centre and Hong Lim Complex, will have building markers, directional signs and locally commissioned mural artwork.

A ‘Heritage Trail’ will feature locally commissioned interactive sculptures to fit in with existing heritage markers put up by the Singapore Tourism Board.

There are also plans to ‘attract a new buzz to the area’ with an ongoing series of activities, events and promotions, which will be revealed in due course.

Property consultant Donald Han said the plans might go some way towards rejuvenating the area, which traditionally is quiet after office hours.

The changing CBD landscape could also help China Place to thrive, the special adviser at HSR Property Group added.

‘I think the timing is perfect. In the past, the crowd tends to disperse by evening because there are no residential elements there. But now you start to see more residential and hotel components there… this helps to increase demand for after-hours services such as F&B (food and beverage).’

Ms Eunice Ng, a creative director at Urban Seas, an aquarium design firm based in China Square Central, said the plans could make the area more vibrant.

‘We rely a lot on walk-in customers, so if the crowd goes up, it’ll help our business,’ she said.

By Kristie Neo

SINGAPORE: Singapore’s office vacancy rates are expected to rise further across all grades and micro markets, with a peak expected in 2013, according to property consultant CB Richard Ellis (CBRE).

In the first quarter of 2012, island-wide vacancy in Singapore increased to 7.3 per cent in the first quarter of the year.

In the core central business district, which covers Raffles Place, Marina Centre, Shenton Way and Marina Bay, the vacancy rate increased to 9.3 per cent from 8.8 per cent the previous quarter.

Grade A rents have declined, falling 3.6 per cent quarter-on-quarter to S$10.60 psf/month.

The quarterly net absorption rate, a key demand indicator, stands at a positive 587,000 square feet, boosted by the high 70 per cent pre-commitment level at the Marina Bay Financial Centre Tower 3 project in March.

Moray Armstrong, CBRE’s Executive Director of Office Services, said: “We are seeing strong leasing interest from the energy/commodities, professional and legal sectors. Whilst rents are expected to trend slightly downwards, we do not foresee a significant rental correction as compared to previous cycles.

“Our medium to long-term outlook is that Singapore is ideally placed to capitalise on the shift of economic power to Asia. The lower office cost base that will emerge from this cycle is likely to further improve Singapore’s competitive edge.”

In Asia Pacific, overall office occupancy declined in the first quarter of 2012. But this trend is likely to end in the second quarter, due to slowing occupier demand and oncoming supply all across the region.

8.3 million square feet of new office stock was completed across the Asia Pacific in the first quarter, 33 per cent above the 10 year quarterly average. Completions are expected to exceed 45 million square feet in 2012, a 30 per cent jump year-on-year. This is likely to result in a supply overhang which might push selected projects to 2013.

Dr Nick Axford, Executive Director and Head of CBRE Research (Asia Pacific), said: “A combination of weakening demand and limited availability of development finance is slowing the pace of construction activity.

“Nevertheless, considerable new supply will still hit the market in 2012, which means newer and better quality products for those occupiers looking to secure alternative space this year.”

Marina Bay is drawing more and more financial and insurance companies, which have taken up about 75 per cent of the occupied office space there, according to property consultancy DTZ. -- ST FILE PHOTO

Marina Bay attracting finance, insurance firms

MARINA Bay is growing in popularity with financial and insurance companies, drawing them away from their traditional Raffles Place business hub.

A recent study by property consultancy DTZ found that Marina Bay hosts a higher percentage of these companies, as of the first quarter of the year.

About 75 per cent of occupied office space there was taken up by firms from the sector, compared with about 55 per cent in Raffles Place.

However, the absolute amount of office space occupied by such companies in the older hub is higher than that for Marina Bay because of the larger stock in the traditional prime office area.

The report stated that these companies occupied slightly over 4 million sq ft of office space in Raffles Place, while the corresponding figure in Marina Bay is 2.6 million sq ft.

The study covered buildings with more than 100,000 sq ft of net lettable area.

Still, Marina Bay is expected grow – to more than 3.3 million sq ft in the next few quarters – as finance and insurance players move into newly completed buildings such as Asia Square Tower 1 and Marina Bay Financial Centre Tower 3.

DBS Bank, for instance, will occupy 18 floors at Marina Bay Financial Centre Tower 3, which received its temporary occupation permit in March.

DTZ’s study also noted that office stock in the Marina area is expected to be boosted to 2.6 million sq ft with various additions including the land swop parcels from the former KTM railway lands which are set to be developed around 2016.

Comparatively, Raffles Place will see an expansion of only 720,000 sq ft from the redevelopment of the Market Street carpark to an office building in 2014.

Still, despite financial and insurance companies flocking to Marina Bay, Raffles Place’s office occupancy rates held up better – 91.3 per cent – in the first quarter because of a bigger tenant base.

But the average occupancy rate of office space in Marina Bay fell more than 30 percentage points year-on-year to 68.1 per cent in that period.

Rent-wise, landlords of buildings with high occupancy rates are maintaining gross face rents, the same study found.

However, more leasing incentives are being offered by landlords keen to fill up space.

This comes in the form of longer rent holiday ranging from two to six months.

Ms Cheng Siow Ying, DTZ’s executive director for business space, said: ‘Although the net increase in supply is low this year, there will nonetheless be downward pressure on rents as occupiers remain cautious and a substantial amount of existing space could be returned to the market for lease.’

By Janice Wu

A street scene at Raffles Place in Singapore. (File pic)

SINGAPORE: DTZ Research said it expects more office space to be returned to the market for lease for the rest of 2012.

In a report, DTZ said about 215,000 square feet of shadow space was made available in the first quarter of the year, up 15 per cent on-quarter.

Shadow space refers to the excess space that companies have leased but are looking to sublet.

DTZ said another 700,000 sq ft could be returned to the market in the coming quarters, either as shadow space or following lease expiry as companies relocate to newer office buildings.

Despite the limited supply of new office space this year, DTZ said there would be some downward pressure on rents as companies remain cautious, avoiding pre-committing to additional space.

DTZ added that landlords of buildings with high occupancy are still keeping gross face rents unchanged.

It said the average gross face rent for prime office space, which does not take into account rent holiday, stood at S$12.00 per sq ft per month in Marina Bay and S$9.80 in Raffles Place in Q1 2012.

But DTZ noted that landlords are more keen to offer leasing incentives such as longer rent holiday ranging between two and six months to fill up the premises.

A two-month rent holiday could translate into savings of 5.6 per cent on effective rent according to DTZ.

The findings also showed that more financial and insurance companies are moving in to Marina Bay.

DTZ said as of Q1 2012, three-quarters of occupied office space in Marina Bay was taken up by companies in the FI sector, compared to 55 per cent in Raffles Place.

The amount of space occupied by FI companies in Marina Bay is expected to grow as occupiers move in to newly completed buildings such as Asia Square Tower 1 and Marina Bay Financial Centre Tower 3.

DTZ head of Asia Pacific Research Chua Chor Hoon said: “The desire by FI companies to be in prestigious locations and in newer buildings designed to suit their needs has led to their gravitation to Marina Bay.

“As more buildings are completed in Marina Bay, the space occupied by FI companies there could soon close in on that in Raffles Place in the next five years.”

Despite the relocation of FI companies to Marina Bay, DTZ said the occupancy rate in Raffles Place has held up better in Q1 2012 because of its bigger base of tenants.

The study covers buildings with more than 100,000 sq ft of net lettable area.

By Janice Wu

Office workers in Singapore

SINGAPORE: Rents of grade A office space has increased in 13 markets in Asia Pacific during the first quarter of 2012, compared to the previous quarter.

This is the key finding of Jones Lang LaSalle in its just-released Q1 Asia Pacific Office Index Report.

The Index monitors grade A net effective rents in 27 key markets in Asia Pacific.

The report also highlights that rents of grade A office space remained static in three markets and declined in 11 markets.

Aggregate rental growth across the region in the first quarter of this year averaged just 0.2 per cent quarter-on-quarter, slowing further from 0.9 per cent in the previous quarter.

On a year-on-year basis, Beijing and Jakarta saw the strongest rental growth across the region (around 50 per cent).

The report also pointed out that net effective rents corrected by 5 to 6 per cent in Hong Kong and Singapore.

This as some landlords lowered asking rents in view of on-going contraction in the financial sector coupled with some tenants moving outside of the Central Business Districts (CBDs).

Dr Chua Yang Liang, head of Research (South East Asia) at Jones Lang LaSalle said: “On the back of a weak business and financial environment, the office market in Singapore continued to face downside pressure especially with the supply overhang, resulting in rising vacancy. We expect prime rents in Raffles Place to ease by 13-15 per cent for the full year.”

The Index also reported that most major Asia Pacific markets saw increasing or stable capital values in the first quarter of 2012.

Across the region, the average quarterly increase in capital values was 0.8 per cent, slowing moderately from the 1.2 per cent recorded in the last quarter of 2011.

Capital values in Jakarta and Beijing recorded the largest quarter-on-quarter (4 to 8 per cent) increases (40 to 50 per cent year-on-year), largely in tandem with rental growth.

Dr Jane Murray, head of Asia Pacific Research at Jones Lang LaSalle added: “Capital values are expected to grow at a slower rate in most markets in 2012, due to more moderate rental growth as well as the continuation of tight credit conditions.

“Despite on-going rental adjustment, capital values should remain largely stable in Hong Kong and fall less than rentals in Singapore. Markets expected to see the strongest growth include Jakarta and Beijing, with increases of up to 30 per cent forecast for the full year.”

Urban Redevelopment Authority

SINGAPORE: Prices of industrial properties were up 7.3 per cent in the first quarter of 2012.

The prices rose sharply compared to the four per cent increase reported in the previous quarter.

Within this segment, property prices of multiple-user warehouse jumped 8.8 per cent, while property prices of multiple-user factory increased by 7.2 per cent.

Rentals of multiple-user factory space rose by 1.3 per cent in the first quarter, higher than the 0.6 per cent in the previous quarter.

The figures were released on Friday in the URA actual price index.

Prices of commercial properties in the first quarter of 2012 were flat from the previous quarter.

Prices of office properties remained unchanged from the last quarter of 2011, while prices of shops rose 0.2 per cent.

Office rentals also dipped by 0.5 per cent, lower than the 0.3 per cent increase in the first quarter of 2012.

URA said more office space from GLS sites sold by the government in 2011 will be in the pipeline.

This includes commercial sites at Robinson road/Cecil Street and Peck Seah Street/Choon Guan Street.

More supply of land is expected from the development of the six plots of land at Marina Bay and Ophir Road/ Rochor Road.

By Chia Hui Kheng

Central Business District in Singapore.

SINGAPORE: Vacancy rates of Grade A office buildings in the central business district (CBD) declined at a slower pace to 6.5 per cent in the first quarter this year.

This compared to the 6.8 per cent fall in the fourth quarter of last year.

According to property consultancy Savills Research in its latest report on the office sector on Friday, the leasing market has been dominated by enquires from small- to medium-sized office space users.

Grade A monthly rents averaged S$8.58 per sq ft in the first quarter this year, a 1.7 per cent decline from the previous quarter.

Savills Research’s director Alan Cheong said: “Demand from investment banking institutions have tailed off. On the other hand, MNCs in the oil & gas, commodities and natural resources sector together with banks specialising in wealth management have continued expanding.”

Still, companies are expected to remain cautious in the year ahead.

Increasing volumes of vacant space will inevitably put pressure on Grade A rents, which are expected to continue trending downwards in the next few quarters.

Savills expects that, after factoring in new supply and possible shadow space, vacancy rates are likely to rise between 9 and 11 per cent by the end of 2012.