Property rates here leave US execs grumpy

Source : Business Times - 23 Jul 2008

New high of 74% unhappy with cost of housing and office leases: survey

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.