Companies are cutting costs to manage their operational expenses – Opex
Singapore’s new office leases declined by more than half as tenants such as Barclays Plc gave up space, while companies including Google Inc moved out of prime office districts to cut costs.
The proportion of new leases dropped to 6 per cent of all signed in the first six months from 15 per cent a year earlier, according to the latest figures compiled by commercial-property broker Cushman & Wakefield Inc.
“Companies have become less optimistic about the outlook,” said Sigrid Zialcita, managing director of Asia- Pacific research at Cushman in Singapore. “There are a growing number of tenants gravitating to non-core, Grade-A buildings and business parks due to lower rents and ample space options.” The city-state’s economy, heavily reliant on exports, is staring at a rough patch. Exports fell for the first time in three months in May and business costs have been rising since the government slowed the inflow of foreign workers in 2010. Employment shrank in the first quarter as manufacturing and construction jobs fell.
Chief financial officers in Singapore are the most pessimistic in the region about profits this year, according to a survey by Bank of America Merrill Lynch. In the poll of 630 CFOs, 53 per cent of those in the city-state said they expect earnings to decline in 2015.