About 16 percent of office space in Singapore is now vacant, property reports said yesterday, with the situation worsening as companies make drastic cuts or quit the city-state to escape its weak economy.
"The outlook for the office property market continues to be weak in 2003," industry consultants Jones Lang LaSalle said.
Commercial real estate services company CB Richard Ellis said an estimated 1.2 million square meters "or an estimated 16 percent of the total stock" in Singapore is empty.
"Based on our records, this is the worst it's been," the company said.
Several multinational companies have packed up and left Singapore in the past 12 months as the economy floundered and China offered an attractive alternative with its expanding market and lower cost base.
Although Singapore emerged from a year-long recession in July, its economic recovery has been weak and unemployment is continuing to rise.
The office market is historically linked to Singapore's economic health, and "continued to perform poorly in the final quarter of 2002 in view of the slowing down in Singapore's economy and the uncertain external political and economic environment," Jones Lang LaSalle said.
But for the companies which have persevered and stayed, there are bargains as rents tumble given the huge oversupply in the tiny Southeast Asian republic.
Average office rents declined 15.7 percent last year and a further 16.5 percent this year, and are continuing to fall.
For prime office space in the deluxe Raffles Place area, rents now average S$58.66 (US$33.37) per square meter per month, 12.1 percent below the previous trough in 1999 during the regional financial crisis.
"The demand for office space is unlikely to improve over the next three to six months in view of the uncertain regional and domestic economic environment," Jones Lang LaSalle said.
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