Stanchart seals S'pore's largest-ever office deal

It leases 24 floors at Marina Bay Financial Centre for 12 years


SINGAPORE'S drive to become a global financial centre took a major step forward yesterday when Standard Chartered signed the biggest office rental deal ever struck here.

The British bank, the latest in a string of international finance giants to expand here, has snapped up 24 floors of the Marina Bay Financial Centre (MBFC), a site some property experts once thought would be a white elephant.

Stanchart's rental deal, including renovations and relocation, is worth $800 million over 12 years starting in 2010 and comes amid a boom in the office rental market that has created shortages of prime office locations.

The 508,298 sq ft of space - just under half the size of VivoCity mall - will make it the biggest in Stanchart's office network across 57 countries.

It sees the deal as a strategic investment in Singapore, said its group executive director, Asia, Mr Kai Nargolwala.

'It demonstrates (our) long-term commitment to our customers and the community here,' said Mr Nargolwala.

Mr Chris Fossick, managing director at Jones Lang LaSalle here, which brokered the deal, said: 'It's a real illustration of how Singapore is developing as a financial hub.'

The bank is the latest to join the space race here. United States investment bank Merrill Lynch said last November that it would lease an entire building at Harbourfront, giving it 200,000 sq ft.

Germany's Deutsche Bank took 280,000 sq ft at One Raffles Quay, making it the single largest tenant. And Swiss bank UBS took up 200,000 sq ft over 10 floors in the same building.

The huge deals, particularly the Stanchart agreement, highlight the turnaround in the office rental sector in the last two years.

The release of the MBFC site for sale was delayed twice in 2003 because developers, battling a slump in demand for office space, feared it would cannibalise demand in the Central Business District.

Now, the booming economy has ignited the office market to the point where there is now a shortage of Grade A space - the top-tier of office space, based on factors such as size, location and amenities - while rents are going through the roof.

In the first quarter of this year, average rents for top- notch office space in Raffles Place climbed nearly 23 per cent to $11.80 per sq ft, according to Jones Lang LaSalle data.

Asking rents at some coveted buildings, including Republic Plaza and 6 Battery Road, are believed to be at record highs of $15 psf or more.

'We are expecting Grade A office rents to rise by another 40 to 50 per cent this year,' said the managing director of consultants Cushman & Wakefield Singapore, Mr Donald Han.

Rental pressure could come as financial institutions increase space in tandem with plans to make Singapore their regional or global base.

Stanchart will use its space in the 33-storey tower one at MBFC to house its front office staff, including local and global businesses. It also plans to hire an additional 2,200 people in the next three years.

The eight office locations it has here will be consolidated into just two or three, with the outlet at 6 Battery Road likely to be one of those retained.

Stanchart is the first tenant to sign up for the MBFC. It also has an option to extend its 12-year lease for a further eight years.

STANDARD Chartered bank is aiming to raise its headcount of 3,800 staff by 58 per cent to about 6,000 by 2010.

'We have every intent to be at the forefront in the continued growth of the financial centre in Singapore,' said group executive director, Asia, Mr Kai Nargolwala.

The British-based bank's Singapore unit is in the top five contributors to group revenue and profit.

Singapore is the global headquarters for most of Stanchart's businesses, including its consumer banking, corporate finance and debt capital markets.