People’s Park Centre could spur Chinatown rejuvenation if sold 

THE en bloc sale of People’s Park Centre, if successful, could help rejuvenate the Chinatown area, but buying interest is likely to be limited to consortiums, given the high ticket price, consultants have said.

The mixed-use development at 101 Upper Cross Street was put up for collective sale via public tender with a S$1.8 billion reserve price, marketing agent ERA Realty Network announced on Wednesday (Jul 6).

This translates to a land rate of about S$2,620 per square foot per plot ratio, including the differential premium and the premium to top up the land tenure to a fresh 99-year lease, ERA added.

The commercial-cum-residential development, completed in 1976, comprises 324 retail units, 256 office units, 120 residential units and a car park. In its first collective sale attempt in 2019, the reserve price was S$1.35 billion.

The building sits on a plot spanning 95,467 square feet (sq ft), zoned under the Urban Redevelopment Authority’s 2019 Master Plan; the gross plot ratio is 8.6, which means it can be built up to a gross floor area of 821,017 sq ft.

Noting that the property has an attractive location — being near the Chinatown MRT interchange and near historical landmarks — Wong Xian Yang, head of research at Cushman & Wakefield, believes there is opportunity to build an iconic integrated development in the heart of Chinatown, a development that could spur gentrification efforts in the area.

Tang Wei Leng, Colliers’ managing director and head of capital markets and investment services, pointed out that many of the developments in the neighbourhood are ageing and in need of a new lease of life.

She noted that the newly-completed State Courts, as well as the soon-to-be completed One Pearl Bank and a luxury hotel in the Mondrian chain, are already leading the change in the locality.

One Pearl Bank is being built on the site of Pearl Bank Apartments, which was sold en bloc to CapitaLand for S$728 million in February 2018. As of last month, (june) 83 per cent of the new, 774-unit, 99-year leasehold condominium had been sold.

Together with widened roads and improved accessibility in the area, some older properties in the vicinity are already benefiting from the uplift created by the increased footfall, and new concept shops in food and beverage, lifestyle and wellness have sprung up, said Tang.

“Many shophouses are also being traded at high values and are in high demand by family offices,” she said, adding that People’s Park Centre presents an opportunity to redevelop a sizeable site in an area undergoing gentrification.

Agreeing, Huttons’ senior director of research Lee Sze Teck said it is probably time to improve the whole mix in the area too.

“The stretch along Eu Tong Sen Street can do with some rejuvenation,” he said. “Even if buildings there don’t go en bloc, the retail mix probably has to be updated. It needs an overhaul.”

He noted that Chinatown Point, across the road from People’s Park Centre, has been notching up higher footfall than other nearby malls on weekends ever since its S$90 million revamp in 2012.

The mall was sold in 2019 by Perennial Real Estate Holdings and its consortium of investors, including Singapore Press Holdings, for S$520 million; the buyer was a fund managed by Pan Asia Realty Advisors (Singapore), a joint venture between Mitsubishi Estate Co and CLSA.

Huttons’ Lee suggested that in People’s Park Centre’s case, the new buyer could even consider retaining the entire structure — changing the residential component to serviced apartments, a hotel or a co-living space, and revamping the mall’s tenant mix.

“That would be cheaper than a complete redevelopment and is also more environmentally-friendly,” he said. “Given what we are seeing with Golden Mile Complex, there is a possibility that old structures can be retained, while their internal organs undergo a major upgrade.”

Completed in 1973 and gazetted for conservation, Golden Mile Complex was sold for S$700 million to a consortium comprising Perennial Holdings, Sino Land and Far East Organization in May. Apart from restoring the existing building and retaining its key features and signature terraced profile, the buyers will explore transforming the building into a mixed-use development with office, retail and residential components.

Colliers’ Tang pointed out, however, that People’s Park Centre’s reserve price is “on the high side”, given the current market environment with patchy global economic recovery, supply-chain disruptions, inflation and higher interest rates.

“We think the interest is likely to come from consortiums of developers and financial partners,” she said. “The hurdle will be the higher cost considerations, which could pose a price mismatch in expectation between the sellers and buyers.”

Since developers are more careful with purchases exceeding S$1 billion, Huttons’ Lee reckons that perhaps up to 3 consortiums may make a bid for the site to share the risks.

“Although the price is slightly high, there is still merit in this site because the Chinatown MRT station is directly beside it, and it is very near the city,” he said, noting that Raffles Place was a 5-minute drive or a short MRT ride away.

The chief executive of real estate consultancy firm Delasa, Karamjit Singh, said: “The plot is undoubtedly attractive for its location and scale. Developers and institutional investors would love these two attributes. The key question surrounds the price.”

Should the site be sold, observers say it may encourage the owners of People’s Park Complex — another old, mixed-use development down the road — to also take the collective sale route.

The tender for People’s Park Centre closes at 3 pm on Aug 18.