Singapore rents have yet to reach the highs seen in 2008, making the market good for both landlords and tenants alike, said a new survey from global commercial agent Cushman & Wakefield.

“Singapore is setting itself in pole position against Hong Kong," said Toby Dodd, country manager for Singapore atCushman & Wakefield. The agent said that the news points to the city-state’s growing appeal for new businesses.

"Singapore is globally renowned for its enviable quality of life; and with a steady stream of prime office space coming to the market it is clear that we have an advantage over Hong Kong in attracting tenants. Hong Kong has continued tight supply, therefore pushing up rents. For growing companies who are looking to expand their business to the Asia-Pacific region, Singapore is the obvious choice, with a better choice of stock without prohibitively high rents,” he added.

Asia-Pacific rents generally recorded the steepest regional prime office rental increases in 2011 according to Cushman & Wakefield’s Office Space Across the World 2012 report. Overall, rents across the region increased by an average of 8 per cent.

Hong Kong maintained its position as the most expensive office location in the world for the second year running, with Tokyo in third. Singapore is ranked 11 in the world based on total occupancy costs. Singapore’s commercial rents are the fourth fastest growing in the world, after Beijing in first position , followed by Moscow and then Shanghai . 

“Steady improvement in property fundamentals has sustained solid rent growth in most markets within Asia Pacific. While signs of cooling were certainly evident in the second half of 2011, broad-based regional economic growth of 5.9 per cent fuelled leasing activity largely driven by IT and banking sector. Rents, however, maintained their downtrend in supply-heavy markets such as Seoul, Hanoi, Ho Chi Minh, and Mumbai,” said Sigrid Zialcita, managing director for Cushman & Wakefield’s research team in Asia-Pacific.

The appeal of Singapore over Hong Kong

Rents in Hong Kong have remained the highest globally for two consecutive years.  Even with the instability in the financial sector in the final quarter of 2011, Hong Kong managed to post the second lowest vacancy rate in Asia Pacific for all of 2011, on the back of a robust absorption rate of 3.7 million square feet, the highest reported since Cushman & Wakefield began tracking this market in 1992. 

 However, rents in Hong Kong began their descent after peaking in September 2011 as macroeconomic trends weakened. Without meaningful GDP growth in 2012, a sustained improvement in rents and occupancy will be challenging for Hong Kong even if new supply remains in check.

Dodd pointed out that Singapore has another advantage over Hong Kong in that it is viewed as a pioneer in terms of environmental consciousness by incorporating green planning in mega-building structures. Singapore is the only city in Asia which is ranked "well above average" by the Economic Intelligence Unit’s Asian Green City Index.

Dodd said: “As of September 2011, about 470 buildings here are Green Mark certified – green buildings are no longer the exception but increasingly the norm in the case of Grade A properties in the CBD. Green building features will play a crucial role in boosting the attractiveness to increasingly socially responsible corporate tenants.”

A poll by think tank Civic Exchange last December found that one in four Hong Kong residents were considering emigrating because of air pollution. “Air pollution does make a difference, particularly in industries such as banking where there are similar jobs in cities like Singapore where the air quality is better and the Government are actively pushing our green credentials,” said Dodd.