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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (40632)	10/2/2008 10:22:13 PM
From: TobagoJack	Read Replies (1) \| Respond to of 220276

more good news from hkg, just in in-tray UBS lunch for Savills y'day... -----Original Message----- 1) They key issue is not whether office rents will drop but but by how much. Chris reckons vacancy rates can rise in Central from current 2,4% to 5.5% as space is surrendered by fin svcs tenants who have overcommitted such as MS, CSFB, DB (can you say ICC tenants???). For non core Chris reckons the vacancy rate can rise from 8.4% to 15%. As a general rule of thumb, a 1% rise in vacancy can lead to a 11% fall in rents. Thus its not unrealistic to talk abt a 30-40% fall in rents. 2) Cap rates look set to rise from 4.5% to 5-5.5% as its now a buyers market w financing being more difficult to obtain and more expensive. Loan to value quantums set by banks have also come down. Landlords will this be hit on 2 fronts. 3) Financial svcs sector will be hit by lower headcount resulting from sector consolidation( BOA/ML, Nomura/Lehman) and lower returns/profitability for investment banks from less leverage and higher capital requirements. This means reduced demand for office space. 4) S'pore serves a different market but is going to see a massive increase in supply post 2010(c.3-4m sq ft coming on stream). Must see slides 4, 5, 8, 10, 14, 18, 19, 20