OFFICE RENTAL COSTS
Singapore - While Singapore remains high on the list of expensive office locations in the Asia-Pacific (APAC) region, the high rental costs will not stop companies from wrestling for prime office spaces.
HR head of American Express International, Yvonne Yap, reasons that brand positioning is a huge factor companies will consider before downgrading to a more obscure spot. Yap says having offices in prime areas empower the statuses of companies.
Seet Chor Hoon, an executive search consultant from The People at Work, adds that some companies may be staying put in expensive office locations for the sake of retaining talent. She says an increased commuting time and a lack of security precautions in more obscure workplace locations could potentially give employees reasons to quit the company. "Sometimes, employees might not agree with the move and they leave the company," she says.
Png Poh Soon, senior manager for Knight Frank's consultancy and research, tells Human Resources that companies will continue filling up the limited premium office spaces despite the rising rental costs. "There is money to be made here in Asia," Png explains.
According to Png, the monthly average rent for a "Grade A" office in Singapore's Central Business District (CBD), such as Raffles Place, costs at least S$7.50 per square feet (psf). The rents can go up to a double digit amount, he adds. Even offices in the suburban areas are costing between S$3.50 and S$5.00 psf now, Png says.
Png is also seeing an increase in financial companies interested in renting premium office spaces. Png's company has been receiving office rental inquiries from investment companies and law firms from the UK and US. He explains it's because these foreign firms are keen on setting up offices in Singapore to expand their business in APAC. "We are seeing more active office leasing activities from the financial sector where incumbent players are looking to expand and new players are entering the market," he says.
Office costs, however, are not likely to escalate much higher. The latest Credit Suisse's Singapore Property Sector report says rents are unlikely to reach the record high in 2007. The report says the "Grade A" rent will be maintained at S$11-12 psf by year 2012-13. This is so Singapore remains competitive in relative to the rents in cities like Hong Kong and Shanghai. The monthly cost of a "Grade A" office in prime areas was S$18.40 psf in 2007.
Singapore is currently ranked the third most expensive country in APAC to rent offices in, according to Colliers International Asia Pacific Office Market second quarter's report. Tokyo and Hong Kong are in the first and second place with annual rents costing US$101 (S$137.40) psf and US$89 (S$121) psf on average respectively.
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