APAC-BFSI-Outlook-2017

MARKET OVERVIEW SINGAPORE BANKING AND FINANCIAL SECTOR SUMMARY

76.32

-9.1%

46%

Prime Rent (USD/Sf/Year)

Rent Growth (YOY in local)

% Occupancy of Financial Sector

Banking and Financial Sector Trends The banking and financial sector is the largest occupier of prime space in the Central Business District (CBD). The weak global economy took a toll on the banking sector in Singapore during 2015, with an increasing number of banks opting to reduce their space requirements in the CBD by shifting back-oŸce sta¥ to cheaper business parks in suburban areas. It was reported that Standard Chartered Bank consolidated in Changi Business Park while reducing their presence in Marina Bay Financial Centre Tower 1, while Barclays gave up space in One Raªes Quay South Tower. However, there are signs of a nascent recovery in 2016 with a few banks such as the Bank of Tokyo-Mitsubishi UFJ and Julius Baer taking up prime space in the upcoming Marina One. In addition, other segments with strong growth potential such as insurance and asset management are continuing to expand their footprint and will likely drive leasing demand in 2016.

Outlook, Opportunities & Strategies for Occupiers During 2015, the overall Grade A CBD rent declined by 10.0% on the back of the weak global economy and the supply overhang of 4 million square feet (msf) scheduled for completion over 2016-2017. Competition is heating up as landlords of existing buildings hasten to secure occupiers for their remaining vacant spaces before the record supply enters the market. Tenants have started to receive more generous incentives such as longer rent-free periods and fit-out subsidies. With the oŸce leasing market continuing to face challenges in the short term due to weak business conditions, the overall Grade A CBD rent is projected to moderate by a further 7.0-10.0% in 2016. While 2015 saw cost-sensitive tenants relocating to decentralized o…ces and business parks, the trend has reversed in 2016 with a wave of flight to quality as firms seize the opportunity to lock in long leases in the upcoming premium developments at attractive rental rates. - June Chua, Executive Director, Leasing

Key Banking and Financial Services Sector Lease Transactions – 2015/2016 PROPERTY SF TENANT

TRANSACTION TYPE SUBMARKET

Marina One

140,000 Bank of Tokyo-Mitsubishi UFJ Relocation

Marina Bay

Marina One

100,000 Julius Baer

Relocation

Marina Bay

DUO Tower

74,000 MasterCard

Relocation

Bugis

SGX Centre 2

53,000 Aviva

Renewal

Shenton Way

Westgate Tower

33,000 Great Eastern Life

New Lease

Jurong

One Raªes Quay South Tower 30,000 QBE Insurance

Relocation

Marina Bay

Key Banking and Financial Services Sector Sale Transactions – 2015/2016 PROPERTY SF BUYER PRICE (US$ MIL) PRICE (US$/SF)

SUBMARKET

Asia Square Tower 1

1,299,220 Qatar Investment Authority 3,380

2,600

Marina Bay

78 Shenton Way (50% stake) 362,199 Alpha Investment Partners 302

1,665

Shenton Way

PWC Building (30% stake) 356,070 DBS Bank

202

1,890

Raªes Place

46 ASIA PACIFIC BFSI OUTLOOK 2017