Land deal with Malaysia to work under one condition: analyst

Absorption of the upcoming supply is forecast to be manageable, although analyst says there should be this one little assumption.

DMG Research noted:

The six parcels of prime Singapore land that Malaysia is getting as part of a massive swap deal have a gross development value of $11b and will be commercialized, with plans to build offices, residences, hotels and retail premises on them. The land, with a total permitted gross floor area of up to 501,020 sqm, covers four parcels in Marina South and two others in the Ophir-Rochor area. Sovereign wealth funds Temasek and Khazanah will set up a new company, M-S Pte Ltd, with 60% held by Khazanah and the rest by Temasek to develop these parcels of land. For the Marina South site covering 341,000 sqm, at least 60% of the site is designated for office space while at the Ophir-Rochor site, 40% of the site is zoned for office use. In all, the M-S sites can generate a total of 2.9m sqft in prime office space. The planned redevelopment of Market Street car park, meanwhile, is projected to add another 740,000 sqft of office space when the project is completed in 2014. While the upcoming supply looms large, there is little new office supply coming into the market after the completion of Asia Square in 2013, providing a window for these new developments to lease out the space in 2014. Absorption of the upcoming supply appears manageable considering annual office take-up of 1.6m sqft, assuming Singapore continues to retain its allure as a financial hub.

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