LIKELY IMPACT OF THE NEW BUSINESS FINANCIAL CENTRE (BFC) ON THE OFFICE MARKET IN THE EXISTING CENTRAL BUSINESS DISTRICT (CBD)

Abstract

The office sector in Singapore has been on the downturn since 2001. In the prime Raffles Place area, vacancy rates are more than 19 percent, higher than the islandwide figure. Thus, landlords are taken aback by the news of the new Business Financial Centre (BFC). Market sentiments are hit, as they are worried about the effect of such a big project on the already weak office market with properties in the Central Business District (CBD) most likely to be affected. Hence any supply of land without confirmation of the demand could potentially flood the office market and affect the current office property owners in the CBD. As the construction of the BFC is inevitable, landlords will have to assess its active impact and formulate better measures to meet the competition that their properties in the present CBD will be facing. This study seeks to investigate the likely impact of the BFC on the CBD. A market sentiments survey and a related quantitative research are conducted. It is found that there are some negative overall impacts on the BFC with increasing degree over time; they are not likely to be devastating on the CBD. Other significant indirect impacts are also found to be present. The remedy actions that property owners could take are also investigated. The findings suggest that the CBD will need to change along with the development of the BFC to complement it and also to prevent the CBD from becoming obsolete.