August 2020

A slew of commercial office buildings has been placed on the market for sale

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2020 has seen a noticeable increase in the number of commercial office buildings that have been put up for sale, either on an en-bloc basis or simple outright sale by a single owner. Some of the more substantial en-bloc sales in the pipeline include The Arcade in Raffles Place, International Plaza in Tanjong Pagar, High Street Centre in City Hall and smaller en-bloc sales at GSM Building on Middle Road and 101 Beach Road. Other single ownership buildings that have just come onto the open market include IOB Building on Cecil Street and ABI Plaza on Keppel Road.

Many of these sites will be suitable for mixed-use development, but the anticipated shortage of new office space around 2025 is likely to mean the office element will be an important factor. The Singapore Government has yet to place any office sites on the confirmed list under the Government land sales program and the only white site that is on the reserve list is at Marine View (New Downtown).

The Arcade, Raffles Place

In June 2020, the mixed-use commercial building The Arcade on Collyer Quay, was for the fourth time put up for en-bloc collective sale via tender (the second attempt in 12 months), with a reserve price of $780 Million. The previous attempts were in 2018 and the original one in 2013, at which time the reserve price pitched at $868 Million transpired to be too high. Seven years down the road with a reserve price nearly $100 Million lower and with the building beginning to show its age, the chances of success are expected to be higher. The reserve price equates to an estimated land rate of $2,833 per sq ft per plot ratio.

A developer could potentially redevelop the site to create a 50-storey skyscraper that would have stunning bay views. Zoned commercial with a plot ratio of 15 it could be possible to develop an integrated development comprising hotel, residential units, offices and retail space. The Arcade was built in 1979, but the site itself is owned by City Developments on a 999-year lease. The majority of the strata title owners have 99 year leases from 1979 and CDL still owns 30% of the strata titled units. The tender closed on 7th July 2020.

High Street Centre, North Bridge Road, City Hall

Recently placed on the market for en-bloc sale with a reserve price of S$800 Million the tender closes on 18th August 2020. This 30-storey property, built in 1975, comprises a shopping mall on ground and basement levels and offices and residential space above. The site area is 60,299 sq ft with a GPR (gross plot ratio) of 7.72 and a gross floor area of 466,085 sq ft. The URA has approved a redevelopment where 60% of the gross floor area can be allotted to commercial use (office/retail) and 40% for either hotel use (max. 450 keys) or residential. The Collective Sale Committee has applied to top up the lease tenure to a new 99-year lease.

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GSM Building, Middle Road, Bugis

Placed on the market for en-bloc sale with a reserve price of $98 Million, with an additional $18.6 Million payment as an upgrading premium, the tender closed on 16th July 2020. The property comprises a 6-storey commercial building on a prominent corner site, at the junction with Middle Road and Waterloo Street. The land area is 12,000 sq ft and the tenure is long leasehold with 61 years unexpired. There are currently three retail units on the ground floor and 30 offices on the floors above. The plot ratio is 4.2, which would allow a 50,000 sq ft development with a height restriction of 16-storeys.

101 Beach Road, Bugis

This mixed-use property has been put up for collective sale with a reserve price of $90 Million. The property comprises a 6-storey commercial building with retail space on the ground floor and offices and residential above. It currently has an area of 36,000 sq ft, which is a plot ratio of 5.03 and occupies a prominent corner site at the junction with Liang Seah Street. The land area of 7,523 sq ft and allowable plot ratio remains at 5.03. The tenure of the site is long leasehold for a term of 999 years from 1827. There are two allowable development parameters for the site: 1. Commercial space up to 31,600 sq ft, and 2. Residential / commercial up to 36,000 sq ft. The height restriction remains at 6-storeys. The tender closed on 22nd July 2020.

IOB Building, Cecil Street

IOB Building (Indian Overseas Bank) has been put up for sale by tender at an overall guide figure of $217 Million. This 6-storey commercial building with two levels of basement car parking, occupies a prominent corner site at the junction of Cecil Street and Cross Street. The site area is 9,600 sq ft with a plot ratio of 12.5, and is zoned for commercial use. The tenure of the site is 99-year leasehold, from May 1983.

The plot ratio would allow for the development of a 15-storey building with a gross area of 120,000 sq ft. An outline planning application for a change in use with commercial on the ground and hotel above was submitted in January this year. The owners expect offers in excess of $1,800 per sq ft plot ratio, which is inclusive of a differential premium for the site’s intensification and extension of its lease to 99 years.

ABI Plaza, 11 Keppel Road

It is understood that this 12-storey commercial property has recently been placed on the market for sale, at a guide price in the region of S$280 Million. The building occupies a prominent corner site with triple frontages to Keppel Road, Tanjong Pagar, and Lim Tech Road and is highly visible from the ECP/MCE expressway. Built in 1994 and originally named RCL Centre, after the then anchor tenant, this freehold building has a total net lettable area of 92,500 sq ft. The property was purchased by the current owner MYP Pte Ltd in 2011 for some S$175 Million.

The site is zoned for commercial use and stands to benefit from the Central Business District Incentive Scheme under the URA Master Plan 2019. This is aimed at promoting a wider variety of uses, particularly residential and hotel use, to encourage a ‘live in’ population in the CBD and liven up the area in the evenings. The GFA could be increased by some 25% if it were to be redeveloped under a hotel scheme or commercial/residential, or by 30% if only the ground floor was for commercial use and remainder for hotel or residential use.

International Plaza, Tanjong Pagar (pending en-bloc sale)

The first attempt for an en-bloc sale was in 2018 and the target price was a massive S$2.6 Billion. It is one of the largest en-bloc candidates in Singapore, with a gross floor area of 1.44 Million sq ft. The property comprises a 50-storey mixed-use development built in 1976 and was one of the tallest buildings in South East Asia at the time. The total site area is 75,000 sq ft, there are 263 shops on the three podium floors, 689 office units between 5/F and 36/ F and 208 residential apartments between 37/F and 50/F. The tenure of the site is 99-year leasehold with 49 years remaining. The word on the grapevine is that apparently around 70% of the owners have approved an en-bloc sale, so are still 10% short of the 80% minimum requirement.

PIL Building, 140 Cecil Street

PIL Building in Cecil Street was put up for sale on 17th July. With a guide price of S$350 Million this equates to about S$3,625 per sq ft, based on a net lettable area of around 107,200 sq ft. Market chatter says eight parties responded with an expression of interest (EOI). The 17-storey building was completed in 1981 and went through an extensive refurbishment in 2011. The total gross floor area (GFA) is 147,315 sq ft, and can be increased by around 71,000 sq ft, according to its commercial zoning. Standing on three plots of land totaling 19,500 sq ft the tenure ranges from freehold for the largest plot to 99-year leasehold for the two smaller plots, with 56 years remaining. The GFA could be increased by 25% - 30% if the successful buyer redevelops the property as a mixed-use development.

Tower Fifteen, 15 Hoe Chiang Road

Currently the location of office building Tower Fifteen, which has recently been decommissioned, this prime freehold site was put up for sale on 22 July with a guide price of S$715 Million. With a total plot area of 39,337 sq ft the site has been approved for hospitality use with a gross floor area (GFA) of around 248,480 sq ft. An additional 25% of GFA was provisionally approved earlier this year, which will increase the GFA to around 310,600 sq ft. Developers will have a number of options including “residential and commercial”, subject to planning approval from the URA. 15 Hoe Chiang Road was last put up for sale in 2015, but was not sold at the time.

Other well-known commercial buildings pending en-bloc sales include:

Shenton House, Tanglin Shopping Centre, Orchard Towers, The Adelphi, Riverwalk, Textile Centre, Golden Mile Complex and Katong Shopping Centre.

To find out the current asking rental rate in any of the above office buildings, go to our Singapore Building Index.

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