Macquarie Global Property Advisors (MGPA) says it expects office rentals in Singapore to remain hot, jumping by 10 to 25 percent this year.
The Australian private equity real estate fund management firm is converting two plots of land at Marina View into twin office blocks. The two towers, expected to be completed in 2012, will also house a luxury five-star hotel.
These land parcels drew top dollars from Macquarie Global Property last year. Costing a total of S$3 billion, the sites will soon enjoy a S$5 billion makeover. Site B, which Macquarie won last December for just under S$953 million, and Site A, for S$2 billion in September - are both on a 99-year lease.
Formerly known as Marina View Parcels A and B, the two-hectare site will be transformed into twin luxury office buildings, one of which will also house a 220-room five-star hotel.
Macquarie expects to announce in the next 3 to 4 months who they will be working with on the hotel.
It says the towers, due to be completed between 2011 and 2012, are well-timed to catch the growing demand for office space.
Simon Treacy, CEO, Asia Investments, MGPA, said: "I think around Asia, we are extremely busy - we see good value emerging around the region. In Singapore, we also think that there will be increased demand in the office sector - rents are likely to grow 10 to 25 percent this year.
"I think over the medium term, people will be surprised because they've underestimated the demand in Singapore for modern international grade office space.
"And we've seen that in Japan for 2003 and this year in Hong Kong. And, I think it's a reflection of the solid economy of Singapore and the ongoing growth in a lot of the financial service sectors and wealth management in particular."
The towers will be more than 40 storeys high and designed by Australian architect Denton Corker Marshall, who also designed the Melbourne Museum and the Australian Embassy in Beijing.
About 60 percent of both buildings will be set aside for office use: Tower A will house 130,000 square metres, and Tower B, 113,580 square metres.
Besides this project, Macquarie Global Property says it is looking out for other bargains.
Mr Treacy said: "I think over the last two years, a lot of investors have probably overlooked and undervalued Southeast Asia. I think now people are seeing very good fundamentals down here, and I think our timing was very good in making a number of acquisitions. We still think there is a very good value in buying... over the next 6-9 months."
Office rentals in Singapore have been surging because of growing demand and a lack of supply. But more office space is expected to enter the market.
The government is targeting to double office space in the Central Business District to an estimated 2.82 million square metres. - CNA/ch
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