Southeast Asia's office market bullish

Southeast Asia's office market bullish

SINGAPORE (AFP): Prospects for Southeast Asia's office
development market are bullish amid aggressive government
campaigns to boost financial and business services sectors, an
Asian property conference was told yesterday.

"Current incentives to attract big banks, insurance firms,
investment funds and others from outside the region are going to
have an impact on the office sector because they need space,"
said Amos Koh, Singapore-based managing director of European
property consultancy DTZ Debenham International.

Koh told the Asia Property '95 conference here that many
Southeast Asian governments even encouraged the development of
office buildings, as they provided attractive incentives to lure
big capital-market players.

"This is going to have a cumulative effect because, say, if
one or two major banks set up shop in one capital, the other big
boys will follow and demand for office space is going to
increase," Koh said.

The two-day conference, attended by property and real estate
executives from the region, was told that Malaysia, Thailand and
Indonesia wanted to develop their own capital cities as financial
hubs to join the big league in Asia.

Manila was also expected to experience a strong office sector
in line with an economic resurgence, recently-packaged investment
incentives and new industrial development schemes.

Koh said that over the past nine months, office rents in
Manila rose by an average 10 percent because of a shortage of
space, while in Bangkok rentals have recovered from the
substantial decline that started in early 1994.

In Jakarta, rents climbed back up to an average US$16 a square
metre (10.76 square feet) in late 1994 at the central business
district in the Golden Triangle and have hovered at that level
since.

An oversupply of space there since late 1993 had led to a drop
in rentals from $24 to $13 a square metre, he said.

For Kuala Lumpur's central business district office rents, Koh
predicted some decline over the medium term because of large
space arising from the development of the mammoth Kuala Lumpur
City Center and other projects as well as downtown traffic
congestion.

But Malaysia's strong economy would underpin a steady take up
rate for much of the new central business district space, he
said.

"This is not just bullish talk. It is becoming clearer over
the last two years that (as an) alternative to Singapore, many
Hong Kong firms are looking at Kuala Lumpur to relocate or set up
branches -- they are not financial but more manufacturing-based
companies," Koh said.

Singapore's rise in office rents was the sharpest over the
past year -- by about 25-to-30 percent for central business
district premises -- largely due to an unprecedented demand
growth as well as relatively little new space expected over the
medium term.

Eric Levy, president of hotel brokerage firm Horwath Hotel
Partners, told the conference that many Asian businessmen were
buying up hotels in the United States because the acquisition
cost was less than that required to build new property.

"The greatest pull now for such property is in the US despite
the recent economic recovery," he said. Most of the US hotel
buyers were from Singapore, Thailand, Hong Kong and Taiwan.