Singapore’s office landlords, long dependent on banks, are broadening their tenant base to soak up empty space as the commercial property market inches toward recovery after a three-year slump in rents.
Rents in the best buildings may start to rise this year, according to brokers CBRE Group Inc. and Cushman & Wakefield Inc. Vacancies in the city-state fell to 5.1 percent in the first quarter, the lowest since September 2008, from the previous three months, CBRE said. Annual new supply will be 38 percent lower than in the past 20 years, CapitaCommercial Trust (CCT) forecasts.
Property owners such as CapitaCommercial and Suntec (SUN) Real Estate Investment Trust are using the cheapest rents in three years to lure commodity traders, law firms and software companies. The new tenants are moving in as financial-services firms scale back expansion plans in the wake of the European debt crisis.
“Singapore’s office market is getting a lot more diversified,” said Elysia Tse, senior vice president of strategy and research at Aviva Investors Asia Pte, which has $2.5 billion in property assets in the Asia-Pacific region. “We are at the turning point where we see supply stopping, demand slightly turning positive, vacancy declining and rents have stopped falling.”
Office inventory surged after the government in 2005 extended the traditional central business district with the development of Marina Bay, which sits on about 360 hectares (890 acres) of reclaimed land of which 80 hectares is allocated for the business district. The area is home to 10 office towers and gaming billionaire Sheldon Adelson’s landmark Marina Bay Sands hotel and casino.