http://www.straitstimes.com/Money/St...ry_639554.html
Feb 28, 2011
Want a CBD office? Try a condo unit
Some small businesses take this route as office rents soar
By Cheryl Lim
OIL trader Rennie Wang has an office with a great location in the heart of the Central Business District (CBD), complete with a view of Marina Bay.
Does he pay sky-high rents? No, because he set up shop in a condominium.
When his oil trading firm Net East Trading was based at Ocean Towers, the rent was around $10,000 a month.
When Mr Wang heard that the block was to be torn down, he decided to buy a 1,033 sq ft unit at The Sail @ Marina Bay and convert it into a workspace. He paid $1.7 million for the two-bedder.
'Paying a mortgage is cheaper than renting, and this way, I get to see my investment appreciate over time,' he told The Straits Times.
He and his staff of five - some are family members - just need phones, desks and computers, so the unit makes a perfect fit. The condo's posh amenities and the restaurants close by are a bonus.
'It's very convenient as the condo has a gym and shower. I can work out, then freshen up before heading to nearby restaurants to meet clients,' said Mr Wang.
His firm is among a select number of businesses that have opted to locate their offices at residential projects in the CBD.
With more downtown projects due to be completed in the next few years, home owners will be keen to lease units to such firms, hoping for higher rents than they might get from residential tenants.
The numbers certainly indicate that Mr Wang is on the right track.
Apartment rents at The Lumiere in Mistri Road start at $4.95 per sq ft (psf) per month, but office rents in the area are steeper. Rented space starts at $7 psf in International Plaza and around $8 to $9 psf in Mapletree Anson. Rent at The Sail starts at $7.60 psf, but office rent at the nearby Marina Bay Financial Centre ranges from $12 to $15 psf.
However, not all businesses are suited for condo set-ups. A home-office enterprise operating from a condo unit cannot employ more than two people who are not living there. Also, it cannot display business signs outside the unit, and its operations must not disturb neighbours.
Firms need to complete some paperwork as well, including registering with the Urban Redevelopment Authority for a $20 home office licence.
Consultants say the relatively low entry barriers make such office alternatives attractive, especially with the steep hikes in commercial rents within the CBD.
A recent DTZ report noted that average prime gross rents in Raffles Place hit $9 psf per month in the fourth quarter of last year, 7.1 per cent higher than in the previous quarter.
Landlords with residential units in the CBD can cash in by giving lower rates to home-based businesses, say consultants.
Cushman & Wakefield's senior manager of Asia-Pacific research, Mr Ong Kah Seng, said small businesses based in residential properties would gain from the wide array of commercial activities in the CBD, as well as being so near major facilities and probably some of their clients.
He said rejuvenation of the area would make it a vibrant hub for commercial, residential and leisure activities.
What might also win over some firms is the flexibility attached to small condo units situated in prime areas.
'Small, good-quality office spaces are hard to come by. An office that does offer a smaller space might charge a higher psf rental rate, and even then, you might have to settle for working in an older building,' said Mr Tan Kok Keong, head of research at OrangeTee.
He said CBD home offices might appeal more to highly educated professionals, foreigners or business owners who have worked overseas, as this sector is more developed in foreign markets.
However, Cushman's Mr Ong cautioned that not all firms would find CBD homes an ideal base for their operations.
Meant for small businesses, such offices might not offer appropriate venues, he said, for potential clients in the area - predominantly multinational corporations or major finance-related institutions.
[email protected]
Reply With Quote
Originally Posted by smallant
The worst is those private residential properties but owners treat them as "SOHO" (e.g. "The Sail"?). 
(Anyway, The Sail has no fence to stop people walking in and out right? Seems very suitable for SOHO?). That explains why SOHO all so Mickey Mouse size since people just want to buy cheap in absolute value to use as office rather than rent an office as office rental in $PSF is much much higher (particularly true for those business district like in Shenton Way or Marina Bay). 
