Alexandra is emerging as a strong alternative to the central business district (CBD) as banks continue to be attracted to the business hub there.

Alexandra is emerging as a strong alternative to the central business district (CBD) as banks continue to be attracted to the business hub there.

Real estate company Mapletree, which developed Alexandra Business Hub, says that it is in ’serious negotiations’ to sign on up to five more banks, chief operating officer Tan Boon Leong told BT yesterday.

One of the banks is asking for 550,000 sq ft and another for 350,000 sq ft.

It recently signed up DBS, HSBC and an American bank looking to move some of their operations there. Mapletree says the average space banks are seeking is 100,000 to 150,000 sq ft.

Mr Tan says that while banks had earlier shifted operations to various neighbourhoods, Alexandra is a ‘true alternative’ to the CBD because of its location - 10 minutes from the CBD and its links to major roads leading to expressways.

Prime office rents in Raffles Place have hit record levels, forcing companies to reconsider their space requirements and manage costs, Mr Tan says. According to a CB Richard Ellis report last month, office rents in Singapore are the fifth fastest growing globally.

Office rent at its Alexandra hub is about ‘40 per cent lower’ than going rates in the CBD. While prime office space is said to be going for about $12 per sq ft, Mapletree is asking $7 psf for office space and $4-$4.50 psf for back room operations space.

While financial institutions have earlier shifted some operations to neighbourhoods such as Tampines and Changi, Mr Tan says that Alexandra is preferred because of its proximity to town.

Also, even though Alexandra used to be an industrial area, Mr Tan says there is no ‘image’ problem. ‘When banks see that other banks are coming, they take a second look,’ he said.

Based on demand so far, Mr Tan says he expects 50 to 60 per cent of the new leasable area of 1.6 million sq ft to be taken up by financial institutions. Oil and gas, telecoms and chemical companies may take up another 20 to 30 per cent, while the remaining space may be taken up by companies which offer support services such as IT.

Mapletree expects to have pre-commitment of 40 per cent of the new space by the first quarter next year.

Mr Tan says multinational companies need more space in Singapore to expand and consolidate their regional presence affordably, which is what Alexandra Hub offers. The complex, which cost Mapletree $405 million to build, includes amenities catering for expatriates such as childcare facilities, a gym with a swimming pool, coffee outlets, laundry and garden landscape.

Source: The Business Times, 28 June 2007