Now’s not the time for OCBC to sell its Chulia St properties

I refer to the article “OCBC should sell Chulia Street properties so assets can be redeveloped to benefit Singapore” (The Business Times, Apr 1) and was surprised by writer Leslie Yee’s suggestion.

The arguments for the sale of the bank’s properties in Chulia Street and Church Street are moot on several fronts, some of which were outlined in the article.

OCBC had said in April 2024 that it was exploring the redevelopment of the three properties to rejuvenate the area, but in February 2025, the bank said the plan has been deferred.

Speaking as a long-time shareholder, I believe this decision is the right one. OCBC is not running out of space for its operations and, like the writer mentioned, redeveloping the three properties involves a huge capital outlay. Any money spent by the bank on redevelopment is not the best use of capital that would benefit shareholders like me.

More importantly, whether OCBC rents or buys another property to house its employees and operations will mean significant costs in its books, not to mention it is hard to find a large-enough office space in a comparable prime location for it to do so.

The cost of renting at market rates for the space the bank needs will be higher than the imputed rentals OCBC is now paying for a fully depreciated property.

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If there is anything to be learnt from DBS’ sale of its Shenton Way building in 2010 to OUE, it is that our local banks must own their flagship buildings. Renting could complicate things.

DBS had to scramble to go into a Reit (real estate investment trust) arrangement to manage the fast-escalating costs of its rental premises after selling its Shenton Way property in the quest for capital efficiency. There is a very limited supply of land in the Central Business District (CBD).

Now, if OCBC were to buy another building, not only would it be held to ransom by current market prices, but there are also no buildings big enough as a direct replacement.

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OCBC should sell Chulia Street properties so assets can be redeveloped to benefit Singapore

Moreover, with the three properties pegged at around S$4 billion to S$5 billion, it will be difficult to find a property developer with a matching appetite.

OCBC Centre, known as the calculator building, is an iconic landmark – and one of the most recognisable buildings in town. So it hardly makes sense – and one would be short on foresight – to insist on tearing down the landmark to make way for the rejuvenation of the CBD, just so that shareholders can have immediate short-term gains.

As a shareholder, I prefer that the bank takes a longer-term vision and weighs its options carefully.

If, indeed, the area must be redeveloped further down the road, there is no reason why the government cannot step in then.

In this instance, there may then be incentives for the bank to do so.

Whatever the case, I don’t think it is realistic to say the bank ought never to sell or redevelop its properties. But now is surely not the time.

Tan Kay Cheng