SINGAPORE: The 30-storey Prudential Tower office building may be 16 years old, but it underwent an extensive refurbishment two years ago, and today looks almost brand new with its gleaming full-marble lobby.
Even then, Leny Suparman still feels it lacks “a sense of arrival”.
The 40-year-old CEO of KOP Properties is part of a consortium that purchased a 92.8% stake in Prudential Tower for $512 million in May.
CBRE had brokered the sale.
The other consortium partners in the purchase of Prudential Tower are Lian Beng Group, KSH Holdings and Centurion Global.
The seller was Keppel REIT, which had upgraded the office tower.
According to Suparman, the consortium is likely to spend “a couple of million dollars” on aesthetic enhancements to create a grander sense of arrival.
This includes upgrading the tenant directory, reception desk, as well as the main entrance and the entrance from the vehicular drop-off area.
The security officer’s uniform is also likely to be changed to a full black.
“It will be like arriving at a five-star hotel,” she says.
After all, Suparman is a connoisseur of such luxury touches, having been involved in the development of upscale condominium projects such as The Ritz-Carlton Residences on Cairnhill Road and Reignwood Hamilton Scotts (formerly known as The Hamilton Scotts).
Even as the cosmetic touches are applied, the consortium p a r t n e r s have already sold half a floor on a strata-titled basis to a mainland Chinese state-owned enterprise, Shanghai Tunnel Engineering (Singapore) Pte Ltd.
The company, which has a presence in Singapore, is said to be working on a number of projects for the Land Transport Authority (LTA).
The purchase price for the half-floor unit of 5,952 sq ft on the 11th floor of Prudential Tower was $2,750 psf, which translates to $16.368 million.
The sale of the half-floor unit was on a private treaty basis and brokered by CBRE.
The 11th floor was put up for sale first as the tenancy is expiring next year.
The unit appeals to those looking to occupy the space within the next 12 months, says Jeremy Lake, executive director of investment properties at CBRE, who is handling the marketing of the property.
Artist’s impression of the vehicular drop-off area
Priced from $2,800 psf
Given the success of the first sale, the other half unit on the 11th floor has been put on the market for sale by an expression of interest exercise (EOI) conducted by CBRE.
The EOI will close on Nov 27.
The second unit is slightly smaller at 5,102 sq ft, and priced from $2,800 psf, which translates to about $14.3 million.
Prudential Tower strata unit up for sale from $2,800 psf The 30-storey Prudential Tower, where an 11thfloor strata unit has just been sold for $2,750 psf, and another unit is on the market At Prudential Tower, the offices start from the 10th floor.
Up to the 19th floor, there are two office units per floor, with separate strata titles.
From the 20th to 30th floors, there is only a unit per floor of some 11,000 sq ft, each with its own strata title.
Prudential Tower presents a good opportunity for those looking to purchase strata office units, says Suparman.
“Every sector has been affected by the property cooling measures except for commercial,” she explains.
“When we bought the property [Prudential Tower], it was quite opportunistic.
Because it was a strata-titled property, we had the flexibility of selling some floors and keeping some for recurrent income.” Prudential Tower has a 99-year lease with effect from 1996 (expiring in January 2095), and the acquisition by the consortium of the 92.8% stake is for an aggregate strata area of 21,433 sq m (about 230,705 sq ft).
The price translates to $2,316 psf based on net lettable area.
Based on the consortium’s purchase price, the net rental yield is about 3.5%.
And with office rents on an upward trend, yield could potentially reach 4%.
Even based on the selling price of $2,800 psf, the yield works out to 3.25%, adds Suparman.
According to CBRE, Grade A office rents stood at $10.95 psf per month as at end-3Q2014, up 3.3% q-o-q.
Meanwhile, average Grade B office rents in the CBD Core area was at $8.50 psf per month, an increase of 2.4% q-o-q.
Suparman says the consortium intends to keep about 30% of the strata space at Prudential Tower for recurring rental income, while selling the others on a strata-titled basis.
“We’re not in a hurry to sell,” she emphasises.
“It all depends on the offer.” Based on the profile of the recent buyer of the strata office unit at Prudential Tower, as well as at the recent sales at Samsung Hub and Springleaf Tower, it is evident that many companies are buying for their own use, says CBRE’s Lake.
He reckons about half the demand is attributed to mainland Chinese companies, while the other half is a mix of Singaporean, Indian and Indonesian companies.
Artist’s impression of the lobby after aesthetic enhancements
Pocket of activity’
The 28-storey Equity Plaza located across the road from Prudential Tower was sold to another consortium, led by GSH Corp, for $550 million in June.
The tenants in the building were recently served notice to move out as the new owners intend to embark on an asset- enhancement exercise.
“Some of them have come over to take a look, and have indicated that they are looking to buy,” says Lake.
Sitting opposite Prudential Tower is the upcoming CapitaGreen, a 40-storey landmark office tower designed by acclaimed Japanese architect Toyo Ito.
The building is jointly owned and developed by CapitaLand, CapitaCommercial Trust and Mitsubishi Estate Asia.
Targeted to be completed by year-end, the office tower with 700,000 sq ft is already more than 20% pre-leased, and tenants include the likes of commodities trading giant Cargill, Swiss private bank Bordier & Cie, insurance brokers Jardine Lloyd Thompson, international law firm Jones Day and an international gym operator.
Meanwhile, Prudential Tower has an MRT entrance sitting right in front of the building.
It therefore has a catchment of its own, attracting even those who are looking to move from a shophouse in the CBD area to a more conventional office space with a bigger floor plate and more amenities.
“The little pocket where Prudential Tower, Equity Plaza and the upcoming Capita-Green are located has become a hub of activity,” says Lake.
This article appeared in the City & Country of Issue 648 (Oct 20) of The Edge Singapore.