2012 Global Market report - NAI Global

Singapore
Seoul, South Korea
Contact
NAI Global
+65 9270 8051
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
270
4.5%
$233.17
$44,968.38
2.4%
2.2%
N/A
5.185
Due to global uncertainties, Singapore has experienced a
weaker corporate hiring sentiment and lower tenant demand
as some companies have shelved plans for relocation and
expansion. In the last 12 to 18 months, the Singapore
government has instituted a number of anti-speculation
measures. Prices have stabilized, however a recent residential
buyer paid a record-breaking S$19 million for a four-bedroom
apartment at The Marq on Paterson Hill for just under
S$6,400/SF.
The Singapore office property market looks likely to stay
caught in the renewed concerns of a global economic slump
in the short to medium term. Singapore’s average CBD, Class
A office space is still more than 50% cheaper than equivalent
space in Hong Kong. With the overall market pre-commitments
at around 60% for new buildings, we do not forecast a
substantial risk of large oversupply. While vacancies are
expected to continue creeping up, we believe that rents will
stay flat (to slightly receding) through early 2012.
Singapore has been listed as one of the three most expensive
prime industrial land markets in the world as of mid-2011.
Biomedical/pharma manufacturing was recently the greatest
contributor to the market. Average monthly gross rents for
factories and warehouses grew between 15% and 17% in the
first three quarters of 2011. With occupancies at 92% for
conventional flatted factories and warehouses, this has
provided the backdrop for continued, moderate rental growth.
Demand was mostly from manufacturers renewing their
existing leases at slightly higher rents.
Retailers have become more cautious over their space needs.
New entrants which dominated the market in recent times
include fashion brands of Aeropostale (at Vivocity, CityLink Mall
and Ion Orchard), H& M (at Knightsbridge) and Abercrombie
& Fitch (at Orchard Building). With the city center, fringe and
Orchard Road areas having the largest inventories and highest
quality of retail space, developers are seeking alternative,
suburban locations.
Overall real estate investment in Singapore in the first half of
2011 was stronger than 2010, but with a trend to slowing
transaction volumes. As of Q4 2011, Singapore was ranked the
seventh most active global investment market with nearly US
$20 billion in concluded investment transactions over the
previous 12 month period. Capital values have primarily ranged
from S$1,500/SF to S$2,500/SF for prime, Class A office space
with retail values ranging generally from S$1,700/SF (suburban,
fringe and smaller size lots) to S$6,250/SF (prime, central).
Contact
NAI Korea
+82 2 6205 3500
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
38,544
6.1%
$986.26
$30,000.00
3.0%
3.7%
3.3%
48.91
The commercial real estate market of 2011 continued a
steady growth from last year. Even though the economy is
still unstable due to the depressed housing market and
rising inflation, investor demand for commercial real estate
such as retail shops and studio type apartments for one or
two people was very high this year.
The office market is taking on different aspects dictated by
region. The CBD is experiencing unprecedented oversupply
and struggling to bring in tenants. Approximately 1 million
SM of new office space entered the market in 2011 with
most of that located in the CBD. In addition, approximately
5.3 million SM of new office space is expected in Seoul
through 2015. Over the next few years Seoul is likely to
suffer from an oversupply in the market. The rent remained
stable but given the lease incentives offered by landlords,
the effective rent is expected to drop. On the contrary, the
Gangnam BD has seen a relatively healthy level of leasing
activity and falling vacancy rates as the IT and social
commerce firms strongly expanded.
Retail continued to experience a steady growth in lease
activity since last year. Even though the sharp decrease of
Japanese tourists after the disaster drove sales down in the
biggest commercial area, affluent Chinese shoppers
contributed to the recovery. The continuous inflow of SPA or
luxury brands is increasing demand for shops in department
stores and major commercial districts.
The industrial sector is showing signs of recovery in
comparison to the latter half of 2010. The rents increased
by 10% to 20% due to the strong lease activity and the
rising demand is expected to continue into 2012. The Free
Trade Agreement with EU is anticipated to boost imports and
increase the demand for warehouse space.
Numerous redevelopment and reconstruction projects are
planned in Seoul. The Yongsan project, with a total projected
cost of KRW 31 trillion (US $30 billion), is expected to
stimulate the real estate market. Renovating office to
hotel space is also very active due to the lack of current
accommodations and an increase in investors seeking
opportunities in the hospitality market. The investment in
prime office is decreasing due to the lack of quality assets
available, whereas the demand for mid-sized office space
is huge and the prices are gradually rising.
Singapore At A Glance
conversion 1.29 sGd = 1 us$ RENT/SF/MO US$ RENT/SF/YR
low High low High Vacancy
cItY center offIce
New Construction (AAA)
Class A (Prime)
SGD
SGD
10.00
8.00
SGD 15.00
SGD 12.00
$ 93.02
$ 74.42
$ 139.53
$ 111.63
7.50%
11.00%
Class B (Secondary)
suburban offIce
SGD 6.00 SGD 9.00 $ 55.81 $ 83.72 11.00%
New Construction (AAA) SGD 7.00 SGD 10.00 $ 65.12 $ 93.02 8.00%
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
SGD
SGD
SGD
SGD
SGD
6.00
5.00
1.40
1.50
2.50
SGD
SGD
SGD
SGD
SGD
9.50
7.50
2.00
2.30
3.50
$ 55.81
$ 46.51
$ 13.02
$ 13.95
$ 23.26
$ 88.37
$ 69.77
$ 18.60
$ 21.40
$ 32.56
8.00%
8.00%
8.00%
9.00%
12.00%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
Solus Food Stores
SGD
SGD
SGD
22.00
20.00
N/A
22.00
N/A
SGD 45.00
SGD 39.00
N/A
SGD 45.00
N/A
$ 204.65
$ 186.05
N/A
$ 204.65
N/A
$ 418.60
$ 362.79
N/A
$ 418.60
N/A
2.50%
3.50%
N/A
2.50%
N/A
deVeloPment land low/sf High/sf low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
SGD 850.00 SGD 1,300.00 $ 28,702,126.96 $ 43,897,370.65
SGD525.00 SGD 850.00 $ 17,727,784.30 $ 28,702,126.96
SGD 35.00 SGD175.00 $ 1,181,852.29 $ 5,909,261.43
SGD 30.00 SGD 80.00 $ 1,013,016.25 $ 2,701,376.66
SGD 900.00 SGD 1,400.00 $ 30,390,487.37 $ 47,274,091.47
SGD 400.00 SGD1,500.00 $ 13,506,883.28 $ 50,650,812.29
Seoul At A Glance
conversion 1135.29 krW = 1 us$ RENT/M 2 /YR
US$ RENT/SF/YR
low High low High Vacancy
cItY center offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
KRW 217,800.00 KRW 360,000.00 $ 17.82
KRW 294,000.00 KRW 447,600.00 $ 24.06
KRW 236,400.00 KRW 336,000.00 $ 19.34
KRW 138,000.00 KRW 312,000.00 $ 11.29
KRW 132,000.00 KRW 288,000.00 $ 10.80
$ 29.46
$ 36.63
$ 27.50
$ 25.53
$ 23.57
7.90%
4.40%
3.30%
4.10%
2.90%
Class B (Secondary)
IndustrIal
Bulk Warehouse
KRW 102,000.00 KRW 234,000.00 $
KRW 120,000.00 KRW 217,800.00 $
8.35
9.82
$ 19.15
$ 17.82
2.10%
5.00%
Manufacturing
KRW 84,000.00 KRW 186,000.00 $ 6.87 $ 15.22 7.00%
High Tech/R&D
retaIl
N/A N/A N/A N/A N/A
Downtown
Neighborhood Service Centers
KRW 1,910,000.00 KRW 3,675,000.00 $ 156.30
KRW 572,250.00 KRW 1,144,500.00 $ 46.83
$ 300.73
$ 93.66
5.30%
7.20%
Community Power Center KRW 287,100.00 KRW 506,000.00 $ 23.49 $ 41.41 12.00%
Regional Malls
KRW 487,000.00 KRW 729,300.00 $ 39.85 $ 59.68 9.60%
Solus Food Stores
N/A N/A N/A N/A N/A
deVeloPment land low/m 2 High/m 2 low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
KRW 36,300,000.00 KRW 39,325,000.00 $129,395,233.74 $140,178,169.88
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
2012 Global Market Report n www.naiglobal.com 41