HSBC Holdings Plc's MacDonald House branch in downtown Sing-apore withstood a terrorist bomb blast in 1965. It didn't survive a round of corporate property sales sweeping through the city's office market.
Europe's biggest bank put the 10-story, red brick building up for sale and moved employees out this year, putting some in leased offices across the street. HSBC joins Eastman Kodak Co, 3Com Corp and other companies in Singapore selling their offices and leasing instead as commercial property values and rents plunge.
"MacDonald House is surplus to our needs," HSBC spokesman Goh Kong Aik said of the 53-year old building, which has been designated a historic site.
Sales of office space by HSBC and others threaten to depress commercial real estate values that are already half their 1996 peak, crimping profits at CapitaLand Ltd and other developers.
More than half the 45 companies on the benchmark Straits Times Index hold real estate they could sell, analysts estimate.
"If there's suddenly a lot of supply in the market, it will suppress prices," said Ian Lui, who helps manage about US$550 million at Allianz Asset Management Co in Singapore.
As Singapore's economy struggles to recover from its worst recession in four decades, prime office rents are at eight-year lows.
"If the yields on heavy assets like land and property aren't there, you divest them," said Chong Yoon Chou, who helps manage US$4.5 billion worth of assets at Aberdeen Asset Man-agement Ltd.
HSBC decided after a review that it could find "no appropriate business use" for 53-year-old MacDonald House, said Goh.
"Some of these sales are going to be difficult," said Richard Tan, head of commercial and corporate industrial services at Jones Lang LaSalle.
"Capital values have been driven so high, so the yields are very low," he said.
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