Corp. Address Change Impacts Existing Properties

<H1> Corp. Address Change Impacts Existing Properties</H1>By Fred Gebhart

<I>Singapore </I>- The March grand opening of the Ritz-Carlton Millenia Singapore is the latest step in a long-planned move for this high-performance city-state's center of business power-and business travel.

Already, corporate travelers are seeing the impact as Fuji, Merrill Lynch, Compaq Computers, Citicorp and other multinationals forsake the familiar concrete canyons of Raffles Place and Shenton Way for lower rents and more modern facilities in the Marina Square area, between Marina Bay and the Singapore International Convention & Exhibition Centre.

The resultant outflow of business from the old Central Business District is easing demand and rates at the Shangri-La, Marriott, Regent, Four Seasons and other traditional business properties as travelers follow their firms to Singapore's new central business district.

Buoyed by the rising tide of business and convention traffic, occupancies and rates are on the way up at the three existing Marina Square properties: the Pan Pacific, Mandarin and Mandarin Oriental.

The news is even better at the Ritz-Carlton, which soft opened in January as Singapore's new price leader at $195 per night.

Kwee Liong Keng, chairman of Pontiac Marina Private Ltd., which owns the $2 billion Millenia Singapore development that includes the Ritz-Carlton, told an opening-night crowd of 3,000 that the 32-story, 610-room property has been profitable since its first month of operation. Average occupancies are running at 60 percent, double the initial projections for the first six months, said sales and marketing director Arthur Kiong.

"At the end of the day, Singapore is a business destination," Kiong said. "We're engulfed by the new financial district, the new epicenter of Singapore."

Kiong is not exaggerating the growing importance of Marina Square. Singapore city planners deliberately are moving the business district out of the crowded central city to the still relatively undeveloped north of Marina Bay. By early 1997, there will be about 4 million square feet of office space in two major developments: Suntec City, a Hong Kong-owned development that includes the convention center and five office towers; and locally controlled Millenia Singapore, encompassing the Ritz-Carlton, a Conrad International scheduled to open in October, two office towers and one of Asia's largest shopping complexes.

"There will only be around 3,000 hotel rooms in the Marina Square area," said Conrad International general manager Willy Optekamp. "That gives us very good potential for solid occupancies and solid rates." That's good news for hoteliers in a market that is about to turn soft.

Indeed, the growth in inventory throughout Singapore coupled with an expected slowing of inbound travel should benefit corporate buyers.

Singapore had about 27,000 rooms at the end of 1995, according to Yeo Cheow Tong, minister for trade and industry (see chart). The inventory is expected to grow to more than 35,000 rooms over the next two to three years, an increase of 30 percent. Inbound arrivals, Yeo warned, are projected to grow by just 3 to 5 percent over the same period, leading to downward pressure on rates.

The Singapore government is doing its part to ensure that Marina Square sidesteps the worst of the impending crunch by offering tax and development incentives that will help fill the new office space.

For example, Compaq Computer is getting what amounts to free rent on 40,000 square feet in Suntec City in return for opening a regional office, thanks to tax breaks granted by the Singapore Economic Development Board. Preferential development policies helped Citicorp take over six floors in a new, computer-controlled "intelligent building" for its new regional headquarters, for about one-third the cost of renovating existing space in the Shenton Way area, according to the Ritz's Kiong.

Other planned developments should make Marina Square even more attractive to business tenants and the hotel traffic they lure.

The Millenia Walk shopping complex includes a private road that developers claim will compete in price and prestige with Beverly Hills' Rodeo Drive. The new Singapore Arts Centre is rising across Raffles Avenue on the shore of Marina Bay. The hot 10-minute walk to the City Hall MRT (subway) station beneath Raffles City will become more pleasant once an air-conditioned underground shopping mall opens in 1998. An expressway that runs next to Marina Square already provides direct access to Changi International Airport. And a light rail line scheduled for 1999 or 2000 should provide even easier access to the rest of Singapore.

The Ritz-Carlton, meanwhile, is aiming for the top of the FIT market, CEOs as well as leisure travelers visiting Singapore with Seabourn, Crystal, Renaissance, Silver Seas and other top-end cruise lines.

The hotel appears to float above an immense barrel arch entrance, putting the lowest guest rooms 120 feet above ground level-six stories above maximum height limits for surrounding buildings. Rooms are 550 to 650 square feet, 25 percent bigger than rooms at other high-end hotels in Singapore, Kiong said. Bathrooms are on the outside walls, with tub-to-ceiling picture windows next to oversized soaking tubs. All rooms have two-line telephones with dataports and voicemail in English, French, Japanese and Mandarin.

The Conrad's decor will be similar to the Ritz-Carlton's, but the property is specifically targeting senior executives. Rooms average 450 square feet. Opening rates have not been set, Optekamp said, but should run about $150 to $165 per night.