UPDATE: CapitaLand Ascendas REIT has issued a clarification in response to claims about the occupancy rate at its properties at Changi Business Park, revealing it has a well-diversified portfolio and higher than average occupancy rates. Read more HERE.

SINGAPORE: A Bloomberg report published this week asserted that the low occupancy rate of Changi Business Park is a “blow” to Singapore’s aspirations to be a regional tech and finance hub.

The article, posted on Thursday (6 June), said that the hub, located near Changi Airport but a considerable distance from the Central Business District, has an overall vacancy rate approaching 40 per cent. Bloomberg, however, acknowledged that this makes Changi Business Park an outlier in Singapore’s otherwise hot commercial real estate market.

The 71.07-hectare business park was completed in 2012 and was designed as a mixed-use development project that includes office buildings, a retail shopping mall, and hotels. It was part of the government’s plan to decentralize the country’s business area.

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Nevertheless, the Bloomberg piece underlined that Changi Business Park, once considered a desirable location for multinational companies dubbed as the “CBD of the East”,  is currently “rapidly emptying out,” largely due to a number of factors. These include increasing work from home options as well as global layoffs in the technology and finance industries.

Companies such as Citigroup, JP Morgan, and IBM have office spaces at Changi Business Park. However, IBM has gone from occupying 12 floors to two, and Bloomberg cited a property listing that says Standard Chartered Plc is looking to lease out two floors of at least 58,000 square feet of office space.

The piece quoted a representative from Standard Chartered as saying that more than four-fifths of the company’s Singapore staff have flexible work arrangements

In an effort to attract new tenants, some of the units at Changi Business Park are being offered at a 3-for-2 rate, which means that if renters sign a new lease for three years, they get a full year of rent free of charge.

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Aside from layoffs and flexible work arrangements, the article also mentioned specific local issues that have posed as challenges to the business park, one of which is its distance from other areas. One bank worker told Bloomberg that she spends an hour and a half each way on her daily commute via public transport, and while taking a taxi or a private hire vehicle would cut her commuting time, its costs are prohibitive.

And then there’s another, more thorny issue.

“Changi Business Park has also become a lightning rod for citizens’ anxieties about the city-state’s wooing of foreign labor to meet business needs,” the article said, explaining that due to the high number of workers from India, the business park has at times been referred to as “Changalore” or “Chennai Business Park.”  /TISG

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