According to sources familiar with the decision, a Chinese AI company, SenseTime Group Inc., is downsizing its office space in Singapore, moving out of a large downtown location into a smaller and cheaper office. The move is a major scaleback of its once ambitious expansion plans as the company confronts rising competition in the AI industry and economic pressures.
According to a recent Bloomberg report, the AI company is leaving its 11,000 sq ft space in Frasers Tower for something smaller. The shift comes as other tech firms, including ByteDance Ltd., grow overseas while China’s economy sags. The downsizing comes when Singapore’s prime office market adjusts to lower demand from major Chinese companies and fluctuating vacancy rates.
SenseTime’s move is part of a wider restructuring to concentrate on generative AI services, for which it received regulatory approval last year. Startups like Moonshot AI and Zhipu are challenging the company’s repositioning.
SenseTime faces threats from larger companies and a new generation of well-funded startups
Last year, the company became one of China’s first to secure approval for generative AI services. While it is pivoting back to the newer field, it’ll be competing with larger companies and a new generation of well-funded startups, remarked a person familiar with the company’s strategies.
SenseTime’s adjustment also follows the company losing Alibaba Group Holding Ltd. as a financial backer in 2023 and past controversies, including a 2019 U.S. blacklisting over alleged human rights violations in Xinjiang, which SenseTime has denied.
However, these challenges have prevented access to vital capital and U.S. technology that could help the company operate and expand globally. SenseTime representatives in Singapore did not comment on these developments.
Times are getting tough for Singapore’s prime office spaces as most firms cut costs
The scaling down is a serious hit to Singapore’s prime office market, which has relied on expansion from rich Chinese firms in recent years. The situation softened as most companies cut costs, and the real estate supply decreased.
Prime office vacancies in the central business district dropped 6.9% in the final quarter of 2024, only three months after they rose to the highest level in two years, according to data from consultancy Jones Lang LaSalle.
SenseTime was among the companies rapidly expanding in the Island nation after it overcame COVID controls faster than mainland China. Its executives argued that they were developing and launching a local AI innovation hub and were looking to triple their staff to 300 in three years.
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