Grade A space in Singapore in short supply

Jones Lang La Salle said opportunities are not in Grade A spaces but to be found in Grade B and suburban markets.

In a webinar held on 30 June entitled “Timing is Everything – Finding Opportunities in Recovery,” it was found that in Singapore, the market has stabilised and is slowly turning around. However, Grade A office space is in short supply, a JLL report said on Wednesday.

Jones Lang La Salle (JLL) said the opportunities lie in Grade B spaces and suburban markets.

Following the webinar, JLL calls for business confidence saying companies should act now to take advantage of real estate opportunities.

“Companies are looking for growth, and the only place where you are going to get double-digit growth right now is in Asia Pacific,” said Jeremy Sheldon, Managing Director of JLL’s Markets team in Asia Pacific, adding that it is in the Asian Pacific region where the cost of doing business is lower.

“There is still reason to be cautious as Asia Pacific may yet be impacted by shifts in global demand for goods and services,” added Sheldon. “There are still great opportunities for companies to take advantage of supply-and-demand imbalances in the market—if they know where to look for them,” said Sheldon.

Among the trends in the key markets found by JLL in the Asia Pacific are:
• Seoul is anticipating a record-high new supply pipeline, with total office stock set to increase by 30% by 2013. The best deals are currently within new developments, and with international landlords entering the market, there will be opportunities for companies to move into new purpose-built Grade A office buildings for the first time.

• In India, there are many opportunities to be found outside the traditional locations of Mumbai and Delhi. Markets in the “BCH triangle” – Bangalore, Chennai, and Hyderabad – are stabilising with significant investment in infrastructure and multiple drivers of business growth. There are some supply-and-demand imbalances that will offer great opportunities to secure space in some of the most flexible real estate markets in the world.

• In Shanghai, there is a huge amount of supply coming on line, and yet the market is going up. This is because the 30,000-sqm pipeline in Pudong is largely pre-committed. The best opportunities are to be found in Puxi, where the 500,000-sqm pipeline is expected to result in higher vacancies.

•In Tokyo, where the market appears to be taking longer to stabilise, the rate of rental decline is beginning to slow down. Unlike other markets, future supply is also limited when compared to the last five years; hence, now really is the time to take advantage of tenant-favorable market conditions before rents hit bottom.

• In Hong Kong, with small financial organisations doubling in size and mainland China banks soaking up space in an already tight market, rents are climbing. For companies that need to be in Hong Kong but do not need to be in the heart of the CBD, Hong Kong East still offers relatively affordable, good-quality space.