It is the third lowest amongst eight Asian cities Colliers International surveyed.
According to Colliers International, Singapore law firms’ average real estate cost per fee earner is at $39,982 (US$30,500) per annum, one of the lowest amongst eight Asian cities studied. “This was markedly lower than $110,115 (US$84,000) in Hong Kong, $66,584 (US$50,800) in Shanghai, and $65,535 (US$50,000) in Tokyo – the three that topped the chart in the Colliers-Michael Page study,” it added.
Colliers’ data showed that law firms occupy about 4.5% of Grade A buildings in the CBD. Recent office leasing transactions included: Reed Smith which took up 15,000 sqft of space at Ocean Financial Centre, 9,000 sqft of space at UIC Building by Ince & Co., and 7,449 sqft of space at Marina One by CMS Cameron McKenna Nabarro Olswang (Singapore) LLP.
“The Singaporean government continues to drive attraction for the legal sector by targeting specific specialities. The city-state continues to be a leading legal hub and specifically an international centre for Dispute Resolution, Arbitration and Intellectual Property,” the report said.
In 2017, 48 of the Global 100 law firms have offices in Singapore, an increase from 40 in 2016-2017 and 36 in 2015-2016. A lion’s share of the international law firms – about 94% – are located in the core central business district (CBD), composed of Raffles Place and the New Downtown. Moreover, 97% core CBD law firms are from the AM100 and UK Top 50 registered in Singapore.
In terms of expenses, about 8-15% of these firms’ monthly outgoings go to real estate costs, nearly the same as Tokyo (8-16%). The largest is in Hong Kong (12-20%) and Beijing (10-18%). The average law firm size in Singapore is 15,661 sqft, whilst 414 sqft is the average space per fee earner.
Colliers International executive director and head of offices services Duncan White noted that prime office rents in Singapore have been soft in the last couple of years, but the market started to bottom out towards the end of 2017. “Rents are on their way up owing to firmer economic growth and more positive business sentiment, as well as a tighter supply of space. We expect CBD Premium & Grade A rents to rise at a much faster clip – by about 10 to 12% – this year, up from the 2.3% growth in 2017. As the market adjusts, early negotiation initiatives should be adopted by occupiers,” he added.
White also thinks an emerging centralized location that law firms are expected to consider is Tanjong Pagar which recently welcomed the completion of Grade A office Development, Guoco Tower. “New developments are slated for completion in 2018 and 2020. Secondary key locations for law firms are Suntec City and Beach Road; however, these accommodate a much smaller headcount and the number of law firms, including local practices,” he added.
The report added that the rapid rise in new technologies could disrupt the legal sector, with some implications on the physical premises firms, occupy and the way they use their occupied space. “Like many industries, talent attraction and retention will continue to be a key consideration for law firms,” it said.