CDL’s majority-owned Delfi Orchard up for collective sale at $438 mil

/ EdgeProp Singapore |

April 17, 2024 5:00 AM SGT

The freehold Delfi Orchard has a prominent frontage of 80m along Orchard Road (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Singapore-listed property group City Developments (CDL) has been actively decluttering its property investment portfolio by divesting legacy strata-titled assets. The latest to be put on the market is Delfi Orchard, an 11-storey commercial and residential complex at the corner of Orchard Road and Claymore Road, which CDL developed in 1985.

According to the group’s 2023 annual report, CDL still owns 126 of the 150 strata-titled lots in the complex. The property sits on a 20,264 sq ft freehold site zoned ‘commercial’ with a 20-storey height limit. Its development baseline, verified by the Singapore Land Authority (SLA), is 131,186 sq ft, which translates to a plot ratio of 6.474, compared with the Master Plan plot ratio of 4.9.

Delfi Orchard is up for en bloc sale at $438 million, with Savills Singapore as the exclusive marketing agent. The guide price translates to $3,397 psf per plot ratio (psf ppr), assuming the property is redeveloped into a new commercial project with a 6.474 plot ratio, and after factoring in a land betterment charge of $7.63 million.

Read also: CDL buys Delfi Orchard en bloc for $439 mil

The property sits on a 20,264 sq ft freehold site zoned ‘commercial’ with a 20-storey height limit (Source: EdgeProp Landlens)

SDI Scheme subject to conditions

“The buyer may consider applying [for redevelopment] under the Strategic Development Incentive (SDI) scheme introduced by the URA,” says Jeremy Lake, Savills Singapore’s managing director of investment sales and capital markets.

However, the SDI scheme is subject to conditions, one of which is that the site must be amalgamated with a neighbouring site to enjoy an uplift in gross plot ratio and floor area.

On April 8, the strata owners of another mixed-use commercial complex along Orchard Road, the 999-year leasehold Far East Shopping Centre, were informed that the $908 million collective sale had been aborted.

The buyer, Glory Property Development, walked away from the en bloc purchase when it failed to get URA approval to redevelop the property under the SDI scheme, which would have granted it a 20% bonus gross floor area (GFA). Glory Property Development is the investment vehicle of Chinese steel tycoon Du Shuanghua, the head of Rizhao Steel Corporation.

Delfi Orchard is strategically located at the junction of Orchard Road and Claymore Road in prime District 9 (Photo: Savills Singapore)

‘Prime redevelopment site on Orchard Road’

However, Tanglin Shopping Centre was successfully sold in its fourth collective sale attempt, when it fetched $868 million ($2,769 psf ppr) in February 2022. Royal Golden Eagle, controlled by Indonesian tycoon Sukanto Tanoto and his family, purchased the property. The former Tanglin Shopping Centre has since been demolished.

CDL previously owned 85 strata office and retail units and 325 parking lots at Tanglin Shopping Centre, which was developed in 1972. It, therefore, reaped a substantial gain from the collective sale. Savills Singapore brokered the en bloc sale of the freehold Tanglin Shopping Centre and the former Ming Arcade on Cuscaden Road, which was sold for $172 million or $3,125 psf ppr in December 2022. The former Ming Arcade has been torn down.

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The new owner, Royal Group of Companies, founded by property magnate Asok Kumar Hiranandani and his son, Bobby, is redeveloping the property into a 20-storey, upscale 170-room hotel.

“The successful collective sales of Tanglin Shopping Centre and Ming Arcade are a testament to Orchard Road’s strong locational attributes,” says Savills’ Lake. “Being a freehold commercial site, Delfi Orchard is another rare opportunity for developers looking to acquire a prime redevelopment site at the gateway of Orchard Road.”

Delfi Orchard’s direct neighbour is the 656-key Orchard Hotel Singapore, which sits on a 92,441 sq ft site. The mall, Claymore Connect, is also part of Orchard Hotel. The hotel was sold to CDL Hospitality Trust in 2006 on a 20-year lease from July 2006, which is extendable to 75 years. However, CDL has a freehold reversionary interest in Orchard Hotel and Claymore Connect upon the expiry of the 75-year lease.

Orchard Hotel underwent a comprehensive nine-month asset enhancement exercise in 2019. CDL Hospitality Trust repositioned the adjacent mall, Claymore Connect, introducing key tenants like Cold Storage supermarket, MapleBear Singapore early childhood education centre, Wonderlit Education Centre for children and Line Pilates studio.

Delfi Orchard’s direct neighbour is the 656-key Orchard Hotel Singapore, which sits on a 92,441 sq ft site. The mall, Claymore Connect, is also part of Orchard Hotel (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Orchard Road renewal

Delfi Orchard has a prominent 80m frontage along Orchard Road. Savills’ Lake expects interest to come from other major Singapore developers and ultra-high-net-worth individuals with development expertise.

The property has been well-maintained and enjoys high occupancy, with tenants such as Starbucks, jewellers, high-end boutiques and aesthetics salons. As such, the new owner could keep the property for investment and redevelop it in the medium to long term, notes Lake.

The neighbourhood around it is being renewed, with new hotels opening over the past year. These include the 350-room Pan Pacific Orchard, which opened in June 2023, the 204-room Singapore Edition and the 142-room Artyzen Singapore, which soft-opened last November. “Delfi Orchard is strategically placed to benefit from the transformation of Orchard Road,” says Savills’ Lake.

The tender for the collective sale of Delfi Orchard Road will close on May 27.

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