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04 June 2015

The paradox of cost reduction in a high cost city

Asia has recently lost a great statesman, Mr Lee Kuan Yew. Singapore declared seven days of national mourning. As we reflect upon what he has accomplished in the last 50 years, we are amazed by the achievements of Mr Lee Kuan Yew. He transformed the small city state of Singapore to what it is today. Singapore has, through the years, accumulated many tributes. Amongst these are:

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  1. The best airport in the world
  2. The 3rd busiest sea port in the world
  3. The 5th richest country in the world

However, there are a few lists that we are not proud to be in:

  1. The most emotionless society in the world
  2. The least positive people in the world
  3. The most expensive city in the world

Singapore has been voted the most expensive city in the world, not once but twice. And twice in a row! That is a record in itself.

Looking at these lists there are two main observations that have caught my attention and here is where the paradox comes in; Singapore is an expensive city, but has low wages for certain sectors of the workforce and the real estate costs continuous to grow.

Singapore is an expensive city, but has low wages for certain sectors of the workforce

As a result of the cost of living, the pressure on salaries has been felt throughout every industry. For many years, the government has fervently defended the belief that salaries must be determined by market forces. This resulted in depressed wages, aged workers, and service providers that needed to offer low cost services and therefore pay low wages.

However, in a non-typical admission of the need to increase wages for the low-income workers, the government implemented a minimum wage for cleaners in 2014.

In a fell swoop, the service providers are now more open to ideas that look at increasing the productivity of their employees. Real estate owners are also keener to increase the operational longevity of their assets. Here is where IWMS, CAFM or CMMS systems come in, as these systems help to improve productivity and reduce costs related to real estate and maintenance management. 

Relentless increase of real estate cost

There are no signs of a slow-down in the Asian prime office real estate cost, yet the true occupancy of the meetings rooms and workspaces are very low.

Companies are then forced to considered systems that allow maximisation of productivity of such precious resources. I’m often pleasantly surprised by how receptive customers are, when they hear of how our Agile Workplace Management can help them decrease their per-headcount real estate cost.

Conclusion

As one of the early employees of Planon Asia, I see the market opening up and it’s been exciting to be part of this phenomenal growth. I enjoy the fact that I can help our customers in reducing their real estate costs in this overpriced market.

Connect with me or leave your comment below for a discussion!

Alex Lim
General Manager Planon Asia