THE PRESENT & FUTURE OFFICE MARKET IN SINGAPORE: POTENTIAL IMPACT OF THE BFC

Abstract

The changes in economic structure have influenced the rapid transformation of the office market development in Singapore. From being a mere trading port in the early 19th century, the office market now sees an intensification of financial and service-related industries in the Core Central Business District (CBD). In addition, the office market has extended its boundaries to provide for the development of secondary grade offices in areas such as New Bridge Road and Tampines. In an era where there exists intense global competition, the government has envisioned Singapore to be a premier business and financial hub. This would be made possible with the inception of a Business and Financial Centre (BFC) in Marina Bay. With such a large-scale development in place, it is important to analyse the possible impacts that it may have on the current CBD. Hence, this study has been undertaken to firstly reflect upon the changes in the office market development in the Core CBD, particularly in terms of its office rentals. This has been carried out by comparing CBD office rentals between two time periods. The second part of this study pertains to a qualitative analysis of the possible impacts that the BFC would bring on the current CBD. From the analysis of this study, it shows that CBD office rentals in the two time periods of study have experienced varying volatility. This is seen to be largely attributable to the effects of globalisation, diversification towards the services industry as well as the changes in Singapore's fiscal policy. Since the first phase of the BFC is only expected to be ready in 2009/2010, there is currently a limited supply of office stock in the CBD. Thus, along with the positive business sentiments, CBD office rentals would be expecting to see an upward rising trend in the next few years. Furthermore, older office buildings in the CBD are adopting redevelopment options so as to remain competitive. Therefore, this shows that the development of a BFC would see a low probability of any cannibalising effect given the limited office stock and the changing landscape of the CBD. However, the occurrence of any external shocks, such as terrorists" attacks, may see negative repercussions to the office market scene in Singapore.