Singapore is second most attractive office location for tech, media and telecommunications: Colliers
Singapore is the second most attractive office location for the tech, media and telecommunications sectors, ahead of Shenzhen and behind Bangalore, based on a Colliers report on Asian office markets released on May 27.
Technology, media and telecommunications (TMT) have become a “key driver” of demand for office space, says Colliers. Larger tenants tend to be concentrated in the CBD or CBD fringe locations, while smaller tenants tend to be located in business parks, notes Colliers.
Singapore reflects a “high availability of talent”, which “outweighs a lower ranking on property metrics”, notes Colliers. The Shenton Way/ Tanjong Pagar area has the highest occupancy rate for office tenants in the TMT sector, at 21%. This is followed by City Hall, with an occupancy of 17%, and Raffles Place, at 12%.
The “high accessibility” and ongoing rejuvenation of the area attracts tenants to the Shenton Way/Tanjong Pagar area, says Colliers. Two new Grade-A buildings were completed in 2016, and a couple more are expected to be completed in 2020-2021. The area is served by three MRT stations: Raffles Place, Tanjong Pagar and Telok Ayer.
Bangalore scores first place due to its “high long-run GDP growth, depth of talent pool, high availability of quality office stock, low staff costs and rents, and low-living cost”, the report states. The top three office spaces are located at Outer Ring Road (ORR), Whitefield and North Bengaluru.
The ORR is easily accessible and houses a large tech cluster, with the highest office stock in the city. However, Colliers expects demand to shift towards Whitefield as ORR has an “overburdened infrastructure” and “limited vacancy”. To attract demand, Whitefield has quality supply at competitive rents, with the upcoming completion of the metro rail to fuel further demand.
Although North Bengaluru is not a TMT cluster, Colliers expects ample new supply of office stock. However, the road networks are poor in the area, it notes.
Shenzhen comes in third place due to the development of its tech sector that houses large TMT groups and R&D bases. The three clusters that stand out are in Nanshan: Hi-Tech Park Middle Zone, Hi-Tech Park South Zone, and Houhai.
Hi-Tech Park Middle Zone is an established cluster, housing the headquarters of Tencent, Baidu and ZTE. The current office vacancy rate stands at about 24%. It is served by one metro line and numerous bus lines.
Hi-Tech Park South Zone comprises universities, R&D institutions and business parks, with a current office vacancy rate at 35%. It is currently served by one metro line.
Houhai, a younger tech cluster, has attracted firms such as Lenova and Alibaba. It has ample availability of Grade-A office buildings and a vacancy rate of 18%. It is served by two metro lines, and one upcoming metro line.
Nanshan benefits from supportive policies from the central government, points out Colliers. Although there is a high supply of new office space, demand and supply should balance out by end-2020, it adds.
The study takes into account the best office market locations based on existing tech clusters, availability of quality office stock, accessibility and rents.