APAC-BFSI-Outlook-2017

ONSHORING

Singapore: Suburban business parks

It was realized, as early as in the 90s, that Singapore would face potential traŸc congestion in and out of the Central Business District during peak hours. To address this before it became untenable, the Urban Redevelopment Authority (URA) embarked on a plan to decentralize commercial activities. The economic development strategy for Singapore in the 90's expanded to encompass the service sector in addition to the shift towards higher value-add manufacturing, for instance product design, software engineering and other technology-based activities, prompted a new zoning category – Business Parks. Policy makers went a step further to segregate the development of business parks by clustering industries, and growing

demand for lower-cost oŸce space by financial institutions let to the the development of Changi Business Park. E¥orts by banks to rationalize their real estate footprint has seen the CBP evolve into a back-oŸce hub. Credit Suisse, for example, consolidated its back oŸces on the island into One@Changi City, occupying close to 200,000 sf. The area is currently occupied by a number of other banks, including DBS Bank, UBS, JP Morgan, Standard Chartered Bank, Bank of Tokyo Mitsubishi UFJ, either in leased spaces or built-to- suit buildings. Rents in CBP, at an average of S$4.00 psf a month, are more than half those in the island’s CBD. And the park will continue to

evolve, with upcoming developments that include the Singapore University of Technology and Design (SUTD), which completed the first phase of its campus construction by 2014. Similar to Silicon Valley, CBP is envisioned to be an incubator for new industries and enterprises emerging from SUTD. Mapletree Business City (MBC) also hosts a number of financial occupiers in the development. Currently, about a fifth of its tenants are from the sector, such as Julius Bær, HSBC and Credit Agricole. However, average rents are close to S$6.00 psf a month given its location on the city fringe. The completion of MBC 2 in 2016 will provide more options to occupiers.

60% Rental Savings (%) SUBURBAN BUSINESS PARKS VS CBD OFFICES 65% 70% 75% 80%

SINGAPORE

CHANGI BUSINESS PA

CBD

55%

MAPLETREE BUSINESS CITY

50%

45%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Note: Grade A oŸces Source: Cushman & Wakefield

34 ASIA PACIFIC BFSI OUTLOOK 2017