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The Ophir-Rochor and Marina South developments will be injecting up to 268,610 sq m of office space into the pipeline, said OCBC in a Singapore Business Review report.
The report said that a respective 60 percent and 40 percent of office components for the Marina South and Ophir-Rochor projects will translate into approximately 268,610 sq m of combined office gross floor area (GFA) in the supply pipeline.
“The Marina South project would add at least 204,600 sq m of office space and is slated for completion by mid-2016, (while) the Ophir-Rochor would contribute at least 64,008 sq m,” said OCBC in the report.
It said that the two projects will likely comprise 73 percent of the total office supply in the CBD for 2012 – 2014.
“Before 2Q11, we believe there was a lack of visibility for the CBD office supply pipeline beyond 2013. This situation was somewhat alleviated in Apr 11 when CapitaLand and CapitaCommercial Trust announced the redevelopment of Market Street Carpark into a Grade A office tower with 82,400 sq m GFA by 2014,” said OCBC.
“Then in early Jun 11, URA included, on its 2H11 GLS reserve list, a white site at Marina View/Union St that could yield potentially 101,400 sq m of prime office GFA by 2016. Now with the additional clarity for the M+S Marina South project, we think any perceptions of limited CBD office supply pipeline beyond 2013 are likely dispel led and this could have a moderating effect on the sector.”
OCBC expects continued tailwinds for Grade A office space, underpinned by quality office space, increasing rental gap between Hong Kong and Singapore and steady economic fundamentals. However, it said that the positive trend may moderate in the coming years, due to the expected increase in supply.
“Our thesis is corroborated by the latest 2Q11 data – rental growth for Grade A office space in the Raffles Place/New Downtown micro-market slowed to seven percent quarter-on-quarter in 2Q11 from eight percent in 1Q11. The overall average occupancy rate for
Grade A CBD office space also fell to 93.5 percent in 2Q11 from 94.2 percent in the last quarter,” said OCBC.
The Marina South project will be developed and marketed jointly by Mapletree Investments and UEM Land, while the Ophir-Rochor project will be handled by CapitaLand and UEM Land.
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