Property rates here leave US execs grumpy

July 23, 2008
Property rates here leave US execs grumpy
New high of 74% unhappy with cost of housing and office leases: survey
By JOYCE HOOI

AMERICAN executives' grouses about the cost of housing and office
leases here hit a new high this year, according to the latest Asean
Business Outlook Survey by the American Chamber of Commerce (AmCham)
in Singapore.

In its report, 74 per cent of American senior executives surveyed
indicated that they were either 'dissatisfied' or 'extremely
dissatisfied' with both the cost of housing and office leases.

While these costs have been a long-standing grievance for expatriates
in Singapore, this year's figures are a significant jump from 2007's
numbers, up from 61 per cent and 45 per cent who were unhappy about
housing and office leasing costs, respectively.

While 2007 was a brutal year for average rental prices, with housing
rental rates increasing 41 per cent and office lease rates increasing
52 per cent according to Knight Frank's director (consultancy and
research) Nicholas Mak, there might be some respite from soaring
property rentals this year.

'Over the six-month period in 2008, housing rental prices have gone
up close to 10 per cent and I expect the increase in rental rates to
slow down over the rest of 2008, to 10-15 per cent by the end of the
year,' said Mr Mak.

Office lease rates, which have gone up by 12 per cent over the six-
month period of 2008, are also expected to grow at a slower pace this
year.

Mr Mak attributes this to the number of arriving expatriates slowing
down and a job market that is growing at a slower rate.

American executives based in Singapore also had the gloomiest outlook
on the effects of a US recession on business in Asia compared to
their counterparts in other Asean countries.

Some 80 per cent of the respondents in Singapore expect the spillover
from a US recession to hurt business in Asia, compared to 66 per cent
in Malaysia and even 77 per cent in inflation-stricken Vietnam.

The survey, carried out in Singapore, Malaysia, Vietnam, the
Philippines and Thailand, included 535 respondents overall, with 130
of them from Singapore.

While respondents in Singapore, Malaysia and the Philippines have
adjusted their regional profit expectations downwards, they were also
the least cheerful in Singapore with only 53 per cent of American
executives in Singapore expecting increased profits in Asean for
2008, compared to 58 per cent and 57 per cent in Malaysia and the
Philippines, respectively.

Sentiments about expansion plans for their firms in Asean also took a
beating in Singapore with 71 per cent saying that they plan to expand
in Asean within the next two years, compared to 82 per cent a year
ago.

Respondents in Vietnam were the most upbeat overall, with 72 per cent
of Vietnam-based respondents expecting business expansion in Asean to
happen over the next two years.