Singapore office market abuzz with investment sale activity
A growing number of investors are now keen to buy offices, given that rents are expected to rise in H2 and a recovery is on the horizon: Savills
Singapore
INVESTMENT sale activity for Singapore office properties is headed for a recovery, with a flurry of potential deals under way.
These include One George Street and Twenty Anson. Suntec City has also seen strata office deals lately.
Outside the financial district, observers say it is just a matter of time before the owners of Lazada One, at 51 Bras Basah Road, explore the possibility of a sale.
Savills Singapore's managing director of investment sales and capital markets, Jeremy Lake, said: "The outlook for the office investment market is compelling for investors. Rents are expected to start rising again in the second half of the year, and prices have already started to firm up in anticipation of the rental recovery.
"We are talking to a growing number of investors who are keen to buy offices in Singapore, now that there is light at the end of the tunnel for the office market."
Data compiled by JLL Research, which cover transactions of S$5 million and above, show that so far this year, some S$1.94 billion in office assets have changed hands. The figure for the whole of last year was S$2.3 billion
In 2019, prior to the Covid outbreak, the figure was S$7.6 billion.
A bidding process is in progress for One George Street, located about 400 metres from Raffles Place MRT station. The Business Times understands that initially, potential buyers were being quietly engaged for the 50 per cent stake in the 23-storey office building held by CapitaLand Integrated Commercial Trust (CICT).
More recently, word in the market is that the remaining half stake in One George Street, held by insurer FWD Group, has also been offered alongside CICT's stake to potential bidders, who are expected to submit their offers later this month.
One George Street's net lettable area (NLA) is about 445,735 sq ft, based on information on CICT's website.
The property is on a site with 99-year leasehold tenure that started in January 2003, leaving a balance of about 80.5 years. Observers say the building could fetch between S$1.25 billion and S$1.29 billion, or S$2,800-S$2,900 per square foot on NLA.
Over at the other end of the Central Business District, near Tanjong Pagar MRT station, AEW's Twenty Anson has been put on the market. CBRE and JLL have been appointed to market the building through an expression-of-interest exercise that will close late this month.
The guide price is understood to be S$630 million or S$3,050 psf on NLA of about 206,200 sq ft. The net yield is understood to be in the high-2 per cent range.
There is untapped gross floor area (GFA) of about 34,400 sq ft.
Twenty Anson is a 20-storey building on a site with 99-year leasehold tenure that began in November 2007, which leaves about 85 years on the lease. AEW bought the property in 2018 for S$516 million or S$2,503 psf.
The owner of 112 Robinson Road, a freehold 14-storey office building, is said to be seeking a price of around S$3,000 psf. Based on the NLA of about 92,205 sq ft, this would amount to S$276 million. The existing GFA of about 115,000 sq ft reflects a plot ratio of almost 11.8. This exceeds the 11.2 plot ratio assigned for the 9,780 sq ft site under the Urban Redevelopment Authority's latest Master Plan.
Market watchers say the ARA Asset Management and Chelsfield joint venture that owns Lazada One, formerly known as 5One Central, may be getting ready to put the property on the market next year.
It bought the asset in January 2019 and is now busy refurbishing it. Committed occupancy now stands at over 90 per cent.
The joint venture is said to be eyeing about S$3,000 psf for the 11-storey property, which has about 241,000 sq ft of space, comprising a street-level retail podium and offices above. However, a spokeswoman for the ARA-Chelsfield joint venture said that as the property is being refurbished, "a sale is not actively considered for now".
Lazada One is flanked by Bras Basah MRT station on the Circle Line and Bencoolen station on the Downtown Line. The asset's refurbishment, aimed at making it more environmentally friendly, started last August and is scheduled for completion in the fourth quarter of this year.
Following that, Lazada/Alibaba Group will move in from Axa Tower, which is slated for redevelopment. Flexible space operator JustCo is already in Lazada One and this potentially provides flexibility for Alibaba Group to take additional space if needed.
Over at Cecil Street, LaSalle Investment Management is understood to be taking the majority stake in a consortium spearheaded by TE Capital, which is in exclusive due diligence to buy PIL Building. The price is expected to be in the S$320-S$330 million range. Some market watchers say the consortium could be eyeing the prospects of selling strata commercial units in the new development on the site.
Activity in the strata office market was given a boost lately with Suntec Reit's sale of six office floors in the Suntec City mixed development.
BT understands that an entity linked to SilkRoad Property Partners is the buyer in the S$197 million transaction involving a floor in Tower One and five levels in Tower Two. The price works out to S$2,510 psf on strata area of 78,491 sq ft; the net property income yield is 3.1 per cent. Savills Singapore brokered the deal.
The property agency also acted for the buyer in another deal in Suntec Tower Two; this is for a low floor which fetched S$38.3 million or S$2,663 psf on 14,381 sq ft strata area. The buyer is understood to be a private fund from Hongkong. The floor was sold by IMC Shipping.
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