Frasers Property defends turf with S$391.9 million acquisition of The Centrepoint rear block

[SINGAPORE] In a move that comes as little surprise to the market, Frasers Property has snapped up the rear block of The Centrepoint that was put up for a collective sale, for S$391.9 million.

The price tag is about 6.2 per cent lower than the guide price of S$418 million cited for the prime Orchard Road property, which comprises the residential component of The Centrepoint development and roughly one-third of its retail units.

Soon Su Lin, chief executive of Frasers Property Singapore, said the move “gives us greater flexibility to unlock the site’s long-term potential, including assessing broader rejuvenation plans for the area”.

“In the meantime, it remains business as usual at The Centrepoint, where we continue to enhance the mall’s retail offerings and organise year-long marketing activities to attract shoppers to the mall,” she added.

The deal was brokered by Savills Singapore.

The Centrepoint comprises two components: a freehold front plot and a leasehold rear plot.

The selling price of S$391.9 million values the rear block site at a land rate of S$2,577 per square foot per plot ratio, after including a land betterment charge of about S$253 million to top up the plot’s lease to a fresh 99 years, and build up the site to its maximum gross plot ratio of 5.6.

Currently, the 44,700 square foot (sq ft) plot has a development baseline of 171,482 sq ft, equivalent to a plot ratio of 3.83.

Frasers Property – controlled by Thai business magnate Charoen Sirivadhanabhakdi – was earlier seen as the most natural buyer and top contender for a deal, as the acquisition will allow it to consolidate adjoining sites for a major redevelopment.

SEE ALSO

Tenants await outcome of The Centrepoint’s partial collective sale effort

Frasers Property gaining full ownership of The Centrepoint rear block not a sure thing

Cuppage Terrace, next to The Centrepoint, up for sale with S$250 million valuation 

The group could also be looking at amalgamating The Centrepoint site with 51 Cuppage Road, a neighbouring 10-storey office building that it owns. The 99-year-leasehold property, completed in 1998, is directly connected to The Centrepoint via a link-bridge.

Under the Urban Redevelopment Authority’s Strategic Development Incentive (SDI) Scheme, the developer may take advantage of incentives offered in terms of bonus gross floor area, more intensive land use and/or building height.

The SDI scheme aims to nudge renewal and redevelopment of ageing buildings in core areas, and offers incentives to asset owners combining at least two adjacent sites in a way that can have a strong transformational impact on the area.

Frasers Property owns almost all – about 96 per cent – of The Centrepoint’s front block, which houses 151 retail units on a freehold plot.

Before the collective sale, the group owned part of the rear block, which contains 66 apartments and 66 retail units on an L-shaped plot with around 52 years left on its 99-year lease. It reportedly held all the retail strata units and eight apartments, adding up to about 52 per cent of the strata area and about 85 per cent of the share value in the rear block.

Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore, said the prime shopping belt “continues to excite developers”.

Several Orchard Road properties have been sold via collective sales brokered by Savills in the past five years, including Tanglin Shopping Centre for S$868 million, Ming Arcade for S$172 million, Delfi Orchard for S$439 million and Concorde Hotel and Shopping Mall for S$821 million.

“In due course, the future redevelopment of these properties will help to transform Orchard Road from a traditional shopping belt into a must-visit vibrant and multi-functional lifestyle destination,” said Lake.

The Centrepoint was developed by Frasers Property when it was the property division of Cold Storage. It has an occupancy rate of about 98 per cent as at Sep 30.

The mall opened in 1983 and became home to Robinsons, an iconic anchor tenant until the department store moved out in 2014 after 31 years.

Another department store, Metro, moved in but closed in 2019, by which time other long-time tenants including Times Bookshop and Marks & Spencer had also moved out.

Anchor tenants today include French sports retailer Decathlon, co-working operator Justco, and a FairPrice Finest supermarket.

The site is zoned commercial, with a height control of up to 10 storeys.

At The Centrepoint, the 66 residential units include one to three-bedroom units, sized between 732 and 3,003 sq ft.

Retail unit owners stand to gain proceeds ranging from S$840,000 to S$9.3 million, while residential owners will receive between S$2.7 million and S$7.1 million, subject to final adjustments.

Nearby Cuppage Terrace was put up for sale about two weeks after The Centrepoint’s rear block went on the market, in an expression of interest exercise that closed on Feb 12. Marketing agent CBRE declined to comment when asked about the results. The strip of 17 conservation shophouses on a 28,986 sq ft site was valued at S$250 million.

As at mid-February, the exercise had reportedly drawn more than 50 inquiries from local and foreign developers, end-users, boutique real estate funds, ultra-high-net-worth family offices and corporates.