THE DEMAND AND SUPPLY OF OFFICE SPACE

Abstract

The principal rationale for the study is the growing dependence on the forecasts of demand and supply for decision-making in property development. The recent downfall of the property market and the forecasts of oversupply of office space have led developers to reconsider the viability of their investments in office projects. The study begins by examining the factors of demand and supply of office space in Singapore. Relevant factors that influence demand and supply were given a closer look in order to evaluate their importance. With viability being the underlying reason for development, the supply of office space is observed to respond to factors such as expectation of demand, financing terms and the costs of development. On the other hand, tha availability of land, planning and planning controls and the URA, with its Sale of Sites' programme are seen to have regulatory effects on the supply of office space. On the demand side of the market, the study indicated that the demand for office space is influenced by GNP, growth of the office employment and computerisation of the office. Having surveyed the factors affecting demand and supply of office space, the later part of the study focussed on the appropriateness of the methods of forecasting demand. The population method, take-up rate method and the employment growth method are each reviewed. The findings suggest that the latter two methods are more suitable for the forecasting of demand for office space.