Singapore’s new office leases declined by more than half as tenants such as Barclays PLC gave up space, while companies including Google Inc moved out of prime office districts to cut costs.
The proportion of new leases dropped to 6 percent of all signed in the first six months from 15 percent a year earlier, according to the latest figures compiled by commercial property broker Cushman & Wakefield Inc.
“Companies have become less optimistic about the outlook,” Cushman Singapore-based managing director of Asia-Pacific research Sigrid Zialcita said. “There are a growing number of tenants gravitating to non-core, Grade-A buildings and business parks due to lower rents and ample space options.”
The city-state’s economy, heavily reliant on exports, is staring at a rough patch. Exports fell for the first time in three months in May and business costs have been rising since the government slowed the inflow of foreign workers in 2010. Employment shrank in the first quarter as manufacturing and construction jobs fell.
Cushman estimates a combined 80,733m2 of prime office space, which command higher rent, are to become available as financial services firms move out of the central business district over the next six months.
More than 27,871m2 was vacated by new technology firms in the year ended in March, the broker said. Companies said lower rent gave them flexibility to expand and freed up capital for other expenses or for hiring, it said.
Grade-A office rent in the central business district could slide 14 percent over the next two years, Cushman estimated, as 371,612m2 of prime office space are to be added next year.
“What’s contrasting is that more than half the relocations this year were a flight to value, where companies signed up contracts in cheaper buildings,” Zialcita said. “This is a big turnaround from 2014, where flight to quality was the main theme driving office leasing, with 71 percent of the space signed up in newer and more expensive buildings.”
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been