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S’pore occupancy costs up 106%

This makes it 13th most expensive place to work in: DTZ report

OCCUPANCY costs in Singapore have soared 106.4 per cent over the past year – among the highest increase across the 137 locations surveyed – according to a new report.

This means that Singapore is now the 13th most expensive place to work in globally, according to the report by property firm DTZ Debenham Tie Leung.

In 2007, Singapore was ranked 55th.

London’s West End continued to be the most expensive location globally, while Hong Kong retained its second position.

DTZ defines occupancy cost as the average total cost of leasing net usable space of 10,000 square feet within a prime CBD location.

It includes rent and outgoings, such as maintenance costs and property tax, if these are normally payable by the occupier. Each city is then ranked on a ‘per workstation’ basis.

Occupancy cost in Singapore came to US$16,220 per workstation per year – more than double the occupancy cost recorded a year ago.

By comparison, occupancy cost in London’s West End is US$31,160 per workstation a year, while Hong Kong’s stands at US$27,540.

DTZ’s survey showed strong occupier demand across all key global regions – with Asia, central and eastern Europe and the Middle East leading the way despite fallout from the US sub-prime crisis.

In particular, cities in the Asia-Pacific region enjoyed a buoyant office market in 2007 – a trend that was especially evident in Singapore.

The uptrend, DTZ said, can be expected to continue going forward.

‘With no significant new supply till 2010 and the depletion of office stock in the CBD as several office buildings undergo redevelopment and/or upgrading, office occupancy cost is expected to rise further,’ said Angela Tan, DTZ South- East Asia’s executive director.

However, while occupancy costs here are expected to continue climbing this year, the rate of increase will be slower than in 2007, experts said. This is because office rentals are expected to climb at a slower rate in 2008.

‘Overall demand numbers for 2008 are not likely to match those for 2007 given the lower expectations for the economy, particularly as companies in the financial and business services (the major consumers of office space) could test their vulnerability against a potential global credit crunch situation in 2008,’ said DBS Group Research in a recent report.

 

Source: Business Times 8 Jan 08

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