MGPA, the Europe- and Asia-focused private equity real estate firm, has announced a letting of 250,000 square feet to Citibank at its Marina Bay development in Singapore.
Taking eight floors on a 10-year lease, Citibank’s letting is the largest recorded in the Singapore office market since the advent of the credit crunch and the subsequent global economic downturn. Citibank will consolidate its Singapore operations at Centennial Tower and Millenia, two nearby offices from where it currently houses 2,500 staff across 25 smaller floors.
Asia Square Tower 1 is part of a staggered, two-tower development which culminates in the completion of tower 2, expected midway through 2014. The first tower will have a total letting space of 1.26 million square feet of offices and 34,000 square feet of retail while the second tower, Asia Square Tower 2, will have 780,000 square feet of offices and 27,000 square feet of retail as well as a 280-room hotel, when completed.
MGPA paid the Singapore Urban Redevelopment Authority a combined S$2.97 billion (now €2 billion; $2.27 billion) for two land plots at the Marina View development area in 2007 just prior to the downturn in a move that evoked criticism from some industry peers.
John Saunders, chief executive officer for Asia, would not divulge rental assumptions made when underwriting the investments at the time. However, he told PERE: “I’m very happy with the rents achieved and I’m extremely happy with the covenants we’ve attracted. I also feel rents are likely to keep going up from this point because there’s virtually nothing in the way of supply coming through.”
Citibank’s letting – the bank will take occupation when Tower 1 is completed next year – comes shortly after the firm achieved three smaller lettings, to private banks Bank Sarasin and Julius Bayer bank, and to law firm White & Case. The lettings bring the building’s occupancy rate up to 43 percent. They also come after MGPA let 70,000 square feet to French insurer AXA at its building at 8 Sheldon Way in August.
Prime rents in Singapore dipped to a low of about S$7 a square foot post-crisis after reaching a high of S$22 a square foot. Saunders said this spate of letting activity underscored why currently achievable Grade A rents had increased to around the S$10 a square foot mark.
In addition to constrained supply over the coming years, Saunders said Singapore was increasingly rivalling Hong Kong as a preferred headquarters location. He said: “Singapore is increasingly becoming a favoured place to have a headquarters as the government here is very business friendly. There is a strong regulatory environment but the government has managed that without tying up people in too much bureaucracy.”
See the forthcoming issue of PERE for further comments by Saunders on MGPA's progress in Singapore.