S'pore in for 'biggest office space excess in 20 years'

[Fiona Fiona]

S'pore in for 'biggest office space excess in 20 years'
By Fiona Chan, Property Reporter

DEMAND for Singapore offices is likely to fall to recession-level lows next year and in 2010, resulting in the biggest excess supply of office space in 20 years, said Credit Suisse yesterday.
It expects office vacancy rates to hit a high of 16.5 per cent in 2010 - up from an islandwide vacancy of about 2 per cent currently - as firms' expansion plans are hit by the global financial turbulence.

 Top losers

Office rentals are also predicted to peak earlier than expected this year, and fall 50 per cent by 2011, said research analyst Shirley Wong, who has downgraded the Singapore office trusts sector to underweight.
After her report was released, office trusts CapitaCommercial Trust (CCT) and Suntec Reit saw large drops in their unit prices that put them among the worst-performing property stocks yesterday. Property counters fell across the board as the wider stock market faltered.
CCT fell 17 cents to its lowest level in almost four years, while Wing Tai and Keppel Land each dropped more than 6 per cent to three-year lows.
'Focus of the office sector has always been on supply, but actual demand is hurting, and repercussions from the US economic shocks could strain it further,' Ms Wong said in the report. Tenants are resisting rent rises, while capital values have been flat for three quarters and vacancies have risen for two quarters.
But not all analysts are as bearish.
The supply of offices in the pipeline could be affected by construction delays, while property market sentiment and prices may start picking up at the end of next year when the integrated resorts take shape, said Kim Eng analyst Wilson Liew.
'I do not foresee drastic cuts in the headcounts of financial institutions in the Asia-Pacific and, in fact, the private banking sector may provide some support.'
But Mr Liew conceded that the looming imbalance caused by more supply and less demand will ultimately lead to lower office rentals. He expects a moderate decline in rents of 10 to 15 per cent between now and the end of next year.
More broadly, property developers may soon be forced to write down their assets as real estate prices fall around the world, said another Credit Suisse research analyst in a separate report.
Developers were holding out for a recovery in sentiment, but 'a confidence crisis from the recent near-collapse of global financial markets could hasten and steepen price falls', said Ms Tricia Song.
Catalysts include the large upcoming supply of homes, a slower expatriate influx, potential job losses, and delays to the completion of the integrated resorts.
Ms Song noted that major write-downs in previous property downturns triggered developers' stocks to plunge as much as 79 per cent in 1998 and up to 50 per cent in 2001.
'CapitaLand and Keppel Land wrote down the most and could do so again due to aggressive acquisitions and revaluation gains in recent years,' she added.
The only major property counters spared yesterday's carnage were GuocoLand, up one cent at $1.85; CapitaMall Trust, up six cents at $2.31; and Bukit Sembawang, up 10 cents at $6.30.

[Kubes.SG]

Some great quotes from Wilson Liew.  What does he see that the rest of the world does not see.  I feel inadequate.  The guy is clearly a genius and should himself be snapped-up by the big financial institutions as he knows the solution to the current FI meltdown.

The supply of offices in the pipeline could be affected by construction delays, while property market sentiment and prices may start picking up at the end of next year when the integrated resorts take shape, said Kim Eng analyst Wilson Liew

'I do not foresee drastic cuts in the headcounts of financial institutions in the Asia-Pacific and, in fact, the private banking sector may provide some support.'

Why didn't he mention the F1, Singapore Flyer or the YOG?

[this is actually good]

On the other hand, lower office rents and good supply of units will simply encourage more MNCs to set up in Singapore, rather than China, HK, Bangkok, etc.
I do not see this as a bad thing.

Similarly, residential prices and rents coming down will just mean lower costs for MNCs to house their employees.

MNCs are MNCs, they do not need to shut down overseas operations just because of a cyclical downturn.  Many MNCs have been in Singapore/Asia for the last 30 years at least, some even for more than 100 years, and they have weathered all sorts of recessions and downturns.

MNCs with good accounting practices would have had provisions for negative earnings in place and their finances could likely weather this downturn, as they had with the ones in the past.

We will likely see a few big names shut down or getting acquired by bigger names but that happens every time the cycle comes.

Sheesh you guys are acting like it is your first recession.  Come on, it is no big deal. But one thing is true: only the fittest survive.

[Kubes.SG]

Not the first recession.  But all the indications are that this is the BIG ONE, and potentially far more damaging than the '97 Asian Financial Crisis.

Don't forget that just as SG prices will decline, so to will all other markets' prices, so though it should be cheaper here, it won't be a distinctive Singapore-only benefit for MNCs.  Plus the cause of this decline is oversupply which has come from too much development and shrinking demand.  The shrink demand is coming from shrinking businesses, not necessarily from businesses relocating out of Singapore.

It is going to be really ugly for the commercial property sector in Singapore.

[Kubes leaving soon]

Not the first recession.  But all the indications are that this is the BIG ONE, and potentially far more damaging than the '97 Asian Financial Crisis.

Don't forget that just as SG prices will decline, so to will all other markets' prices, so though it should be cheaper here, it won't be a distinctive Singapore-only benefit for MNCs.  Plus the cause of this decline is oversupply which has come from too much development and shrinking demand.  The shrink demand is coming from shrinking businesses, not necessarily from businesses relocating out of Singapore.

It is going to be really ugly for the commercial property sector in Singapore.

I remember during the 97 crisis, many expats returned home. So with this current one being the BIG ONE, even more expats should be going back. So when is your turn? Your days in this forum should be numbered

[Here we go again....]

Not the first recession.  But all the indications are that this is the BIG ONE, and potentially far more damaging than the '97 Asian Financial Crisis.

Don't forget that just as SG prices will decline, so to will all other markets' prices, so though it should be cheaper here, it won't be a distinctive Singapore-only benefit for MNCs.  Plus the cause of this decline is oversupply which has come from too much development and shrinking demand.  The shrink demand is coming from shrinking businesses, not necessarily from businesses relocating out of Singapore.

It is going to be really ugly for the commercial property sector in Singapore.

I remember during the 97 crisis, many expats returned home. So with this current one being the BIG ONE, even more expats should be going back. So when is your turn? Your days in this forum should be numbered

This is again the dumbest post repeated. Yes yes, recession comes and only expats get fired, locals not... This same post comes back every once in a while, maybe always from the same person?

[pls don't blame]

him .... the noron lost money buying at BUBBLY prices 

[Kubes.SG]

I remember during the 97 crisis, many expats returned home. So with this current one being the BIG ONE, even more expats should be going back. So when is your turn? Your days in this forum should be numbered

Well done.  My days are numbered.  I will be heading to Changi.  I am impressed with your reasoning and insight.  Now I am worried.

Yes seems like in Uniquely Singapore, all expat jobs are in recession-linked sectors, and all those jobs will disappear.  Singaporeans will be untouched and can then happily rent all commercial and residential property to each other.  Paradise!

[To the Dumbest]

Not the first recession.  But all the indications are that this is the BIG ONE, and potentially far more damaging than the '97 Asian Financial Crisis.

Don't forget that just as SG prices will decline, so to will all other markets' prices, so though it should be cheaper here, it won't be a distinctive Singapore-only benefit for MNCs.  Plus the cause of this decline is oversupply which has come from too much development and shrinking demand.  The shrink demand is coming from shrinking businesses, not necessarily from businesses relocating out of Singapore.

It is going to be really ugly for the commercial property sector in Singapore.

I remember during the 97 crisis, many expats returned home. So with this current one being the BIG ONE, even more expats should be going back. So when is your turn? Your days in this forum should be numbered

This is again the dumbest post repeated. Yes yes, recession comes and only expats get fired, locals not... This same post comes back every once in a while, maybe always from the same person?

Yes locals will get fired but most expats are not going to be spared if the BIG ONE really hits. Or are you guys being delusional thinking only locals will get fired?? The faster you face reality, the lesser the shock for you when you get your pink slip.So am I wrong in saying that Kubes could be returning home soon since he is so confident the BIG ONE is going to hit us.?

[Delusional Kubes]

I remember during the 97 crisis, many expats returned home. So with this current one being the BIG ONE, even more expats should be going back. So when is your turn? Your days in this forum should be numbered

Well done.  My days are numbered.  I will be heading to Changi.  I am impressed with your reasoning and insight.  Now I am worried.

Yes seems like in Uniquely Singapore, all expat jobs are in recession-linked sectors, and all those jobs will disappear.  Singaporeans will be untouched and can then happily rent all commercial and residential property to each other.  Paradise!

When the BIG ONE hits as you predicted, all will(including mysefl, locals, LLs, etc) suffer including YOU. So treasure your last few months of posting in this forum if you think you are going to be right.

[Kubes.SG]

Guys, you don't know my situation.  So don't be too presumptuous.  In a pretty much recession resistant sector, so little risk of leaving town without it being my choice.  Also in anticipation of this mess, I have taken a significant cash position, so only need to manage which banks I use.  Will I feel some pain, yes.  Will I be able to benefit from this mess, yes.  Hope others are getting themselves ready.

[I guessed]

Guys, you don't know my situation.  So don't be too presumptuous.  In a pretty much recession resistant sector, so little risk of leaving town without it being my choice.  Also in anticipation of this mess, I have taken a significant cash position, so only need to manage which banks I use.  Will I feel some pain, yes.  Will I be able to benefit from this mess, yes.  Hope others are getting themselves ready.

I more or less guessed - you must be a lecturer. But then why get so interested in property when you will hardly save enough to own more than 2-3 cheap houses in Australia. Is that why you are busy running down local property market - because you cannot afford it?

[aaaaaaaaaa]

Guys, you don't know my situation.  So don't be too presumptuous.  In a pretty much recession resistant sector, so little risk of leaving town without it being my choice.  Also in anticipation of this mess, I have taken a significant cash position, so only need to manage which banks I use.  Will I feel some pain, yes.  Will I be able to benefit from this mess, yes.  Hope others are getting themselves ready.

I more or less guessed - you must be a lecturer. But then why get so interested in property when you will hardly save enough to own more than 2-3 cheap houses in Australia. Is that why you are busy running down local property market - because you cannot afford it?

You might be right. Kubes does write like an academic (emphasis on data, etc)  though he must be a lousy one as most of the  basic premises for his arguments are wrong.

[whither you]

aaaaaaa or 1234567 or troll ... office rntals are coming off. Anybody hear anything abt Republic Plaza rentals  

Property prices will come off. He bought at BUBBLY prices and patrol these expat threads to comfort himself .. tsk tsk  sweat sweat 

[Bears sweating]

aaaaaaa or 1234567 or troll ... office rntals are coming off. Anybody hear anything abt Republic Plaza rentals  

Property prices will come off. He bought at BUBBLY prices and patrol these expat threads to comfort himself .. tsk tsk  sweat sweat 

As far as I am concerned, I will sleep very soundly even if there is a DEPRESSION because I have no loans. Only bears like you who have repeately missed the boat will be sweating especalluy more so with URA figures like 1.8% decline in 3 months. Wish you luck in achieving your dream.

Anyay I am not that stupid to think that with me posting in this forum will have an impact on the market and what awaits us.