Hongkong Land Seeks More Singapore Office Plots: Southeast Asia ~ Marina Bay Sands

Thursday, September 5, 2013

Hongkong Land Seeks More Singapore Office Plots: Southeast Asia

2:30 PM Koomhoo No comments

Hongkong Land Holdings Ltd., which

owns a stake in the biggest developer of Singapore’s new

financial center, will seek more commercial plots in the island-state as tenants seek to upgrade to new buildings.

Hongkong Land, part of a venture with Cheung Kong Holdings

Ltd. (1) and Keppel Land Ltd. (KPLD), will evaluate land purchases in

Singapore’s prime office areas when the government puts them on

sale, Executive Director Robert Garman said. The venture built

the key development in the new business district, Marina Bay

Financial Centre, for about S$4.5 billion ($3.5 billion).

Global banks such as Standard Chartered Plc and Macquarie

Group Ltd. upgraded their Singapore offices to new locations

developed by Hongkong Land and its partners, while Barclays Plc

and Nomura Holdings Inc. have relocated regional and global

functions to Singapore, ranked the easiest place to do business

for seven straight years by the World Bank. Monthly prime office

rents rose 4.2 percent in the June quarter from the previous

three months, according to Cushman Wakefield Inc.

“We are confident of the Singapore office market,” Garman

said in an interview in Singapore on Sept. 4. “There are still

multinational companies that remain in older properties so one

can argue that there is sufficient demand that can be absorbed

in this new district.”

Marina Bay

The island-state’s move to open up its financial sector

after the 1997 Asian financial crisis has helped boost demand

for office space, according to CBRE Group Inc.

The area known as Marina Bay is a 360-hectare (890-acre)

development area created from reclaiming land off the sea

fronting the banking district, and now includes Las Vegas Sands

Corp. (LVS)’s Marina Bay Sands casino-resort with a convention center

that’s able to accommodate 45,000 delegates. Land reclamation

played a prominent role in the growth of Singapore’s central

business district, according to Los Angeles-based CBRE.

Rents in Marina Bay posted the strongest start to a

recovery with rents climbing 10.9 percent in the three months

ended June from the March quarter while the vacancy rate

declined 2 percentage points to 3.6 percent, property consultant

Cushman said.

“We are at a cusp where rents are bottoming out this year

and pricing power will shift back to the landlords next year,”

Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte,

said. “The economy is picking up, which will translate into

better office demand.”

Singapore last month raised its forecast for economic

growth to a range of 2.5 percent to 3.5 percent this year. The

government previously predicted growth of 1 percent to 3

percent. The economy expanded 2 percent in the first half, Prime

Minister Lee Hsien Loong said on Aug. 8.

Stagnant Recovery

Not all agree that Singapore’s office leasing market is on

a steady path to recovery. It remains difficult and fragile with

the global economy still searching for a sustainable growth

model, said Chia Siew Chuin, a Singapore-based director at

Colliers International UK Plc. The 17 countries that share the

euro remained the key area of concern with their governments

trapped in austerity and their banks reluctant to lend because

of economic uncertainties, she said.

Hongkong Land owns and manages about 450,000 square meters

(4.8 million square feet) of prime commercial space in Hong

Kong’s Central Business District. The company, based in the

city, develops premium residential properties in countries

including China and Singapore where its subsidiary, MCL Land

Ltd., is a developer.

More Relocations

Shares of Hongkong Land closed 2 percent lower at $6.39 in

Singapore trading. The stock has declined 8.6 percent this year

compared with a 4 percent drop by the benchmark Straits Times
Index. (FSSTI)

Among companies that are set to upgrade their offices are

National Australia Bank Ltd. and Swiss Reinsurance Co., which

plan to take space at Asia Square Tower 2 in the new business

district, according to Colliers. The bank will move from Suntec

Tower Five while Swiss Re will relocate from One Raffles Place

Tower 1, Colliers said.

A lot of the new demand is also coming from energy and

mining sectors such as BHP Billiton Ltd. (BHP) and Rio Tinto Plc. (RIO),

Garman said.

“Overall, we are confident on Singapore,” Garman said.

“Over the past 10 years, you have seen a migration of a lot of

companies out of older stock, particularly the banks where they

have more demanding needs that the older buildings cannot

provide.”

To contact the reporters on this story:

Pooja Thakur in Singapore at

pthakur@bloomberg.net

To contact the editor responsible for this story:

Andreea Papuc at

apapuc1@bloomberg.net

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