S’pore Office Costs Escalate

Source : TODAY, Tuesday, January 8, 2008

A dearth of supply and high demand from businesses expanding in the region drove up prices so much that Singapore recorded the second highest annual growth in office occupancy costs in the world last year.

Annual office occupancy costs here rose 93 per cent to US$16,220 ($23,275) per workstation, just behind Moscow’s 95-per-cent growth, according to real estate consultancy DTZ Debenham Tie Leung’s Global Office Occupancy Costs survey.

The survey tracks total occupancy costs across 137 business districts in 49 countries and ranking is focused on a workstation basis to better reflect the costs of accommodation, DTZ said.

“With no significant new supply till 2010 and the depletion of office stock in the Central Business District as several office buildings undergo redevelopment or upgrading, the office occupancy cost is expected to rise further” said Ms Angela Tan, DTZ South-east Asia’s executive director.

Singapore is now the 13th most costly place in the world to occupy an office, up from 55th a year ago. Worldwide, London’s West End remained the most expensive.

In the Asia-Pacific, Singapore moved to fourth place from ninth a year ago and is now behind only Hong Kong, Tokyo and Mumbai. Property consultants expect office occupancy costs to continue to rise in the region this year, although uncertainty arising from the US sub-prime crisis will keep price hikes in check.

“We see a huge demand from the financial sector and multinationals, and the accountancy and legal sides are expanding rapidly,” said Mr Chris Archibold, regional director and head of markets at property consultancy Jones Lang LaSalle.