Singapore’s Suntec City Office Gains From Firms Relocating From Hong Kong
SINGAPORE – UOB Kay Hian Group Research analyst Jonathan Koh expects the occupancy rate at Suntec City Office to improve, reported The Edge on Tuesday noon (19 April, SGT).
“We expect occupancy at Suntec City Office to edge higher by 0.8 percentage point quarter-on-quarter to 98 percent in Q1 FY2022,” said the commercial property market watcher.
He revealed that in recent times, Suntec City Office has received more concrete enquiries from multinational corporations (MNCs) keen to transfer their regional headquarters from Hong Kong to Singapore.
For instance, New Balance relocated to Singapore and became a new tenant at Suntec City Office in Q1 FY2022, while Samsonite expanded its real estate footprint at the office complex in Q4 FY2021 ended December 2021.
Consequently, Koh has maintained his “buy” rating on Suntec REIT with a higher target price of S$1.88 from S$1.74.
Meanwhile, Standard Chartered is expected to surrender 200,000 sq ft of office space over nine floors at Marina Bay Financial Centre (MBFC) Tower 1 by Q4 FY2022, but there’s already a replacement for half of the space.
“We understand that a technology company has committed to take up 100,000 sq ft of the vacant space. Other potential tenants for backfilling include companies from media and financial services industries,” Koh revealed.
MBFC’s management expects solid rental reversion for Standard Chartered’s surrendered office space as the anchor tenant pays lower rent.
Moreover, physical occupancy at Suntec City Office rose by 10 percentage points to 25 percent in early-2022, while that at Marina Bay Financial Centre and One Raffles Quay have improved by 10 percentage points to 30 percent.
This comes on the back of substantial relaxation of COVID-19 curbs in Singapore, as work from home (WFH) is no longer the default work arrangement and more staff have been allowed to return to their office.
“With 75 percent of employees allowed back to their offices starting April 2022, physical occupancies at Suntec’s office properties should further improve,” Koh concluded.