Asian banks increasing real estate footprint

Bank of Tokyo-Mitsubishi has pre-leased 140,000 sq ft at the upcoming Marina One development (artist's impression above).
Bank of Tokyo-Mitsubishi has pre-leased 140,000 sq ft at the upcoming Marina One development (artist's impression above).PHOTO: M+S

But trend reversed among Western banks as they cut back on costs

Asian banks have been leasing increasing amounts of office space in the region while Western lenders have been reducing their presence, according to real estate services firm CBRE.

Mr Moray Armstrong, CBRE's managing director of advisory and transaction services, said in a report: "This trend is evident in Singapore where Asia-Pacific financial institutions have been active. In particular, Japanese banks have featured prominently in the leasing market in Singapore in recent months while a few Chinese entities are showing keenness to acquire ownership positions. There are a few potential transactions in the pipeline."

Bank of Tokyo-Mitsubishi has pre-leased 140,000 sq ft at Marina One, for instance. Other deals here include the World Bank, which leased 50,000 sq ft at Marina Bay Financial Centre Tower 2, while Citibank renewed its 48,500 sq ft lease at Capital Square.

Headcount reduction and numerous business challenges have prompted many Western banks to continuously review their long-term space requirements, meaning their leasing activity tends to be renewals - "partly a short-term cost-saving tactic involving negotiating better terms", said CBRE.

All this mirrors the contrasting fortunes of Asian and Western banks recently. Western banks cut 13 per cent of their global workforce from 2009 to last year, but banks from the Asia-Pacific grew headcount by 34 per cent and have been adding more staff this year.

KEEN ON S'PORE

Japanese banks have featured prominently in the leasing market in Singapore in recent months while a few Chinese entities are showing keenness to acquire ownership positions. There are a few potential transactions in the pipeline.

MR MORAY ARMSTRONG, CBRE's managing director of advisory and transaction services.

International investment banks and commercial banks have been cutting back on office space in prime areas, causing a decline in the average size of office leasing transactions in Beijing, Tokyo, Hong Kong and Singapore.

In Singapore, Sydney and Melbourne, Western banks have sub-leased their excess space, CBRE noted. In South-east Asia, five regional banks opened new offices in the Philippines, including Japan-based Sumitomo.

Chinese banks have been active in expanding in the central business districts of Hong Kong and Sydney. "In Hong Kong, Chinese financial institutions, especially mid-sized commercial banks and investment houses, have been key drivers of office leasing demand for Grade A buildings in core areas in recent years," said Ms Ada Choi, senior director of research, CBRE Asia-Pacific.

In Hong Kong, China Everbright bought Dah Sing Financial Centre, and China Life Insurance bought One Harbour Gate West Tower as their overseas headquarters.

A version of this article appeared in the print edition of The Straits Times on August 30, 2016, with the headline 'Asian banks increasing real estate footprint'. Print Edition | Subscribe