Marina One, Duo developments symbolic - and also viable projects

Singapore

THE two new integrated developments that are the fruit of the 2010 land-swap deal between Singapore and Malaysia are not just iconic buildings of national importance, but are also projects that have the mandate to be commercially viable, the chairman of M+S has said.

Azman Yahya was referring to Marina One and Duo, the two mixed developments declared open on Monday. The opening of the projects, jointly developed by Singapore and Malaysia, was timed ahead of the eighth Singapore-Malaysia Leaders' Retreat.

Prime Ministers Lee Hsien Loong and Najib Razak declared the developments open on Monday evening, in a ceremony attended by a delegation of ministers from Singapore and Malaysia and about 300 guests.

Mr Azman, speaking in an interview to reporters, said: "These developments are not just symbolic, they are also commercially very successful. Valued at S$11 billion (S$7 billion for Marina One and S$4 billion for Duo), and despite being newly completed, we reached solid office occupancy rates and attracted many Fortune 500 companies to relocate and call Marina One and Duo their new homes."

The two developments, which obtained their temporary occupation permits last year, have achieved an occupancy rate of more than 70 per cent for their office components.

Confirmed corporate tenants in Marina One include Swiss private bank Julius Baer, consultancy PwC Singapore, co-working space provider JustCo, financial services provider Prudential, ride-hailing platform Grab, agri-business Olam International, oil company BP Global, and financial institutions Daiwa Capital and Mitsubishi UFJ Financial Group.

Among the office tenants in Duo are Abbott Laboratories, Mastercard, Regus Serviced Offices, Golden Equator Group, Amcor and Chevron.

Mr Azman told the reporters that some tenants have chosen to take up spaces larger than what they had in their previous addresses. Space expansion is an indicator of companies' positive outlook for their businesses.

Both Marina One and Duo also have residential components. M+S said more than 80 per cent of the 521 units in the first tower of Marina One Residences have been sold, as have 96 per cent of the 660 units at Duo Residences. A second tower at Marina One Residences will be released for sale this year.

When asked what is next for M+S, Mr Azman replied that it is a specific special-purpose vehicle set up for the development of the land swapped under the bilateral deal.

"(It is) not meant to be an ongoing entity. However there could be more collaboration between Malaysia and Singapore - that would be a government-to-government level (discussion). If there is an opportunity, we would like to play a part."

M+S is the joint venture owned by the sovereign wealth funds of Malaysia and Singapore, respectively Khazanah Nasional Bhd and Temasek Holdings.

M+S is 60 per cent owned by Khazanah and 40 per cent by Temasek. It was set up in 2011 to develop the two land parcels in the Marina South (where Marina One now stands) and Ophir-Rochor areas (now the site of Duo), following the implementation of the Points of Agreement between Malaysia and Singapore to resolve an impasse over land owned by the Malayan Railway in Singapore.

Khazanah and Temasek are also undertaking joint developments in Iskandar Malaysia through Pulau Indah Ventures, a 50-50 joint venture developing the Afiniti Medini and Avira integrated-wellness projects. Afiniti Medini was completed in 2016.

As for whether M+S will actively purchase land or take part in government land tenders, Mr Azman (who sits on Khazanah's board) said that would be a shareholders' decision to be made by Khazanah and Temasek Holdings.

Lee Theng Kiat, the chief executive of Temasek International, said on Monday that he is "very pleased" with the completion of the two M+S projects, and added that the collaboration between the Khazanah and Temasek teams was smooth throughout the process.

Mr Azman pointed out that levels 28 and 29 of the office tower in Marina One span over 100,000 sq ft each, making them the largest prime Grade-A office floor plates in Asia. Facebook occupies one floor and Julius Baer, the other.

He regards Duo, designed by German architect Ole Scheeren, his personal favourite, because its two towers look as though they are dancing or embracing each other - and therefore symbolise for him the close ties between Malaysia and Singapore.

Government-linked companies were also involved in both projects. UEM Sunrise was the appointed project manager that undertook the marketing of both Marina One and Duo; Mapletree and CapitaLand were the appointed project managers overseeing development and construction for Marina One and Duo respectively.

Moray Armstrong, CBRE's managing director of advisory and transactions, said: "What a tremendous milestone for the Singapore office market today, with the topping out of Frasers Tower and Paya Lebar Quarter as well as the official opening of Marina One and Duo. These events tell a bigger story about Singapore's strong fundamentals and its growth as a major international business destination."

He said signs are pointing to stronger leasing activity as both existing and pipeline projects are recording significant increases in commitment levels. "Optimism in the landlord community is gathering strength off the back of the stronger pre-commitment levels in new office developments, but also in response to the growing awareness that there will be a reduced array of new options available to occupiers over the next two to three years."

Bargaining power has thus tipped away from the occupiers to the landlords, some of whom are asking for rents higher than what may be supportable, he said.

M+S declined to disclose the rental rates for Marina One, but said they are in line with current market rents.

CBRE's data says Grade-A core CBD rents stood at an average of S$9.40 per square foot (psf) a month in the fourth quarter of 2017, 3 per cent higher than the quarter before.