TOP STORIES
The Call
Will tech companies move the needle for office property?
By Gwyneth Yeo / theedgemarkets.com.sg | January 24, 2017 : 8:25 AM MYT
Printer-friendly versionSend by emailPDF version
Translated by Google Translator:
Select Language*▼
SINGAPORE (Jan 24): Facebook is set to take up a lease of 250,000 sq ft at Marina One, in a nod to the similar expansion growth of the financial services and commodities sectors in the past.
Facebook’s new office space will occupy one of the high density floors that runs between the two office towers, and will be the largest anchor tenant at the development. With that, Marina One is estimated to be about 60% pre-committed at present.
Yet, Deutsche Bank’s analysts Joy Wang and Man Chien-Fie remain cautious on the Singapore office property segment, as they expect vacancy to grow by more than 1% in 2017. Assuming that all of the new major technology, media and telecom (TMT) sector companies excluding Google were assumed to double their space requirements for 2017, on top of the known expansion leases, new net absorption would amount to just 700,000 sq ft, or half of Deutsche Bank’s full year estimates of 1.5 million sq ft.
On the other hand, the sector’s performance may change if there were three additional new anchor tenants with Facebook’s size, higher-than-expected stock withdrawal, or extended “double occupancy” from tenants who are relocating from older buildings to newer ones.
To that end, Wang and Man expect rents to recover in 2017 but without any “meaningful upward trends”.
Deutsche Bank’s top pick is Mapletree Commercial Trust.
Shares in MCT closed 1.5 cents higher at $1.47.
