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Occupancy Rate Is Up In CBD’s Office Sector, Who Are The Winners?
Tradeable, Tradeable Ideas | 10 July 2014
By: Raymond Leung
Articles (142) Profile
  1. The latest report from DTZ showed that growth in Singapore’s office properties is expected to be positive with increasing rents and strong valuations.
  2. Office occupancy rates grew 0.4 percent to 95 percent with the Marina Bay area growing faster than the central CDB area.
  3. Key winners include CapitaLand, DBS Bank as well as Keppel Land and Keppel REIT.

According to the latest report from DTZ, growth in Singapore’s office properties is expected to remain positive with increasing rents and strong valuations. This comes amid an environment of higher demand and lowering supply especially in the CBD area.

On average, Singapore’s office occupancy rate grew by 0.4 percent to 95 percent on a quarter-on-quarter (QoQ) basis. Significant growth was seen in the Marina Bay area as it saw the highest occupancy rates and rents in CBD. The occupancy rate for the area increased to 91.4 percent QoQ while the average rents grew by 6.5 percent QoQ.

According to DTZ, significant office rent growth was seen in the Marina Bay area.

However, slower growth was seen in the central CBD area with valuations of office spaces of Raffles Place and Shenton Way area growing at 0.5 and 0.2 percent QoQ respectively.

According to DTZ, the CBD central area saw muted growth in terms of office rentals

CapitaLand and DBS bank managed to benefit from the growth in CBD properties. CapitaGreen, a new development by CapitaLand which is expected to be completed by end of this year is located in Raffles Place. Currently, the property has secured a pre-commitment of 21 percent of its net lettable area.

DBS is the unexpected beneficiary of the growth from the repositioning of its property portfolio and relocation of its main office. The bank previously sold its former-headquarters, DBS Building located on Shenton way before purchasing and moving into MBFC (Marina Bay Financial Centre).

However, Keppel Land and Keppel REIT seem to have emerged as the overall champion. As the main owner and developer of MBFC, Keppel Land owns a huge stake in the property directly and through Keppel REIT.

Significant gains can be expected from the increase in rentals and fair value gains for Keppel Land and REIT. Keppel Land was featured in last week’s Tradeable Ideas and can be found here. Other beneficiaries of the growth in Marina Bay Area include Hong Kong Land and Suntec REIT.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

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