URA Clarifies Office Property Data In Report

Source : The Business Times, 8 Aug 2007

We refer to the article, ‘URA’s new office data draws mixed reaction’ (BT, July 28), which compared the new office property data made available by URA on July 27, 2007 and those reported by some property consultants.

Your report highlighted that the office vacancy rate figures released by CB Richard Ellis were lower than that released by URA, but omitted the explanation we had given to your reporter. As explained, URA’s office vacancy rate figures are computed solely based on the physical occupation of space.

In contrast, property consultants usually also factor in office space that has been pre-committed to tenants but not physically occupied yet. This does not give the actual current physical vacancy and may also result in double-counting, as the tenants may be vacating other buildings when they shift to their new premises.

The differences in methodologies used by URA and property consultants hence could result in variances in office vacancy rates. The attention of the public should be drawn to this so that they can be more discerning when they make reference to the data.

The article also reported comments from a property consultant that the new office data could be improved by naming the specific buildings in ‘Category1′ and ‘Category 2′, and that ‘Category 2′ is a broad definition and information related to office space in this category may not be meaningful to the public.

The main purpose of releasing data for ‘Category 1′ and ‘Category 2′ office space is to allow the public to have a general gauge of the differences in rentals and vacancy rates between the two office segments as well as the changes of rentals and vacancies over time within each segment.

Hence, it is not necessary for us to name the specific buildings in each category. It is also not appropriate for the government to attach a label to any building which might have a quality connotation, as it can affect its market value. We had in fact given this explanation to your reporter.

By providing a separate set of median rental data for ‘Category 2′ office space, which accounts for about 80 per cent of the total stock of office space in Singapore, URA is also showing the level of typical rents being paid by the majority of office space users in Singapore.

The article also said that the market can easily absorb four million square feet of office space in one year. This is misleading. The average annual absorption or increase in occupied stock between 2004 and 2006 was only 2.4 million square feet per year.

In the history of Singapore, there was only one year, that is, 2000, since URA started compiling such data in 1990, when the increase in occupied stock exceeded four million square feet.

We wish to reiterate the importance of providing the public an accurate explanation of the methodologies and rationale so that the public can better understand the fuller context and be more discerning when they make reference to the new data released by URA.

Choy Chan Pong, Director Land Administration for Chief Executive Officer Urban Redevelopment Authority