The great Orchard Road collective sale in the offing?
By Cecilia Chow
/ EdgeProp Singapore |
Far East Shopping Centre's collective sale may have fallen through this time, but it underscores the need for renewal on Orchard Road (Photo: Samuel Isaac Chua/EdgeProp Singapore)
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At the close of its collective sale tender in May, Far East Shopping Centre received an offer of $850 million — about 6.4% below the previous offer of $908 million and 8.4% below the guide price of $928 million.
For the deal to go through, the collective sale committee needed 80% of the strata owners at the 298-unit, strata-titled mall to consent to the lower price by June 6, the submission deadline for Strata Title Board approval. CBRE handled the sale.
As at June 5, over 60% of the strata owners had agreed to the offer. Since it did not meet the requisite 80%, the offer lapsed at the close of June 6.
The $850 million bid submitted by an Indonesian developer was not conditional on securing URA’s approval for redevelopment under the Strategic Development Incentive (SDI) scheme. It was unlike the previous offer of $908 million, which was conditional on the approval.
Far East Shopping Centre received an offer of $850 million, 6.4% below the previous offer of $908 million and 8.4% below the reserve price of $928 million at the close of the tender in May (Photo: Samuel Isaac Chua/EdgeProp Singapore)
That offer was made by Glory Property Development, an investment vehicle of Chinese steel tycoon Du Shuanghua’s Singapore-based Bright Ruby Resources. The developer had walked away from the deal after URA rejected its redevelopment proposal as it involved only a single site and did not meet the criteria of the SDI scheme.
The SDI scheme offers bonus gross floor area (GFA) for redevelopment as well as flexibility in land use and building height in areas URA considers strategic, such as Orchard Road. One of the eligibility criteria of the SDI scheme is that the redevelopment proposal should include a minimum of two adjacent sites.
However, a URA spokesperson says there are “exceptional cases” where the proposed redevelopment is able to have “a positive impact beyond the confines of a single site and contribute to the rejuvenation of the larger street block or precinct”.
UOL received URA approval to redevelop the former Faber House in January 2021 under the SDI scheme (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Redevelopment of Faber House
A case in point is the redevelopment of the former Faber House, an eight-storey office building. In January 2021, Singapore-listed UOL Group received in-principle approval from URA to redevelop it into a 19-storey hotel under the SDI scheme.
With the plot ratio intensification, the total GFA of the building is about 11,000 sq m (118,404 sq ft). Construction work commenced in April 2023, with the hotel slated to open in 2026. It will include a bank, an urban veranda, F&B establishments and a rooftop bar.
Designed by Woha, the 200-key hotel will capitalise on the “City in Nature” theme, featuring a cascading waterfall and cliff-like, vertical landscape carved out of its façade. The hotel will have pavilions, staircases and activities to enliven the streetscape.
A sheltered linkway will be built from the hotel to Design Orchard next door at level 3, with another bridge connecting the hotel to the old Singapore Chinese Girls’ School compound behind it.
Artist’s impression of the upcoming 200-room hotel designed by WOHA on the site of the former Faber House (Picture: UOL Group)
‘Removing mystery’
In response to EdgeProp Singapore’s queries, URA says: “UOL’s SDI proposal served to plug a critical gap in the planned pedestrian network for the precinct, thereby enhancing the connectivity, user experience and benefitting the surrounding streets beyond the confines of its single site”.
On the other hand, Glory Property Development’s proposal submitted for the redevelopment of Far East Shopping Centre, which also constituted only a single development site, “did not meet any criteria for an exemption to be considered”, says URA.
So far, nine applications under the SDI scheme have been received, adds URA, of which six have been supported.
Jeremy Lake, Savills Singapore’s managing director of investment sales & capital markets, says it would be “helpful” if URA could write to owners of buildings suitable for SDI and inform them of the plot ratio incentives available and the conditions required to meet them.
“It will remove some of the mystery around SDI and facilitate collective sales of ageing strata-titled developments,” adds Lake. “Property consultants can be more accurate in their assessment of the potential land price that owners can expect.”
Delfi Orchard was sold en bloc to CDL for $439 million at the end of May (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Orchard Road-Claymore
Savills recently brokered the collective sale of Delfi Orchard for $439 million to Singapore-listed property group City Developments Ltd (CDL). The price works out to $3,346 psf per plot ratio (ppr) based on the existing GFA of 131,186 sq ft.
Before the deal, CDL had already owned 126 (84%) of the 150 strata-titled shops and apartments in the 11-storey freehold building. Delfi Orchard is next to the 656-key Orchard Hotel Singapore and Claymore Connect mall, which were sold to CDL Hospitality Trust in 2006 on a 75-year lease. However, CDL retains the freehold reversionary interest in Orchard Hotel and Claymore Connect, and may explore the potential to tap the URA SDI scheme in the future.
CDL also owns Palais Renaissance on Claymore Road, which is separated from Delfi Orchard by the strata-titled, mixed-use development Orchard Towers. The strata owners of Orchard Towers had attempted a $1.6 billion collective sale in 2022 which failed.
The strata owners of Orchard Towers had attempted a $1.6 billion collective sale in 2022 which failed (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The recent en bloc purchase of Delfi Orchard could revive the collective sale hopes of the strata owners at Orchard Towers. Built in 1975, the freehold Orchard Towers has two towers linked by an overhead bridge across Claymore Drive. Singapore-listed property company Hiap Hoe is Orchard Towers’ biggest stakeholder with 59 strata commercial units, of which 21 are shops and 38 are offices.
Delfi Orchard is the third major collective sale in the Orchard Road corridor, following the collective sales of Tanglin Shopping Centre for $868 million ($2,769 psf ppr) in February 2022 and Ming Arcade for $172 million ($3,125 psf ppr) in September 2023. Savills brokered all three deals.
Next to the Faber House redevelopment is the former Orchard OG, which has been leased to Amity Global Institute, and Midpoint Orchard, where 31 strata shops were offered for sale in January (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Somerset makeover
Another stretch of Orchard Road undergoing rejuvenation is in the Somerset area. In January, a portfolio of 31 strata commercial units at Midpoint Orchard was launched for sale via an expression of interest exercise. The asking price for the freehold strata units in the six-storey mall was $281 million. Aric Lim, district director of Huttons Asia, is the exclusive agent for the property.
Built sometime between 1984 and 1985, Midpoint Orchard has 59 strata shops with an existing strata area of 66,134 sq ft. It sits on a freehold site of 12,269 sq ft with a plot ratio of 5.6.
Word on the street is that a buyer is currently doing due diligence on the property and seeking URA approval to redevelop the building under the SDI scheme. It will include the addition of an underground link to Somerset MRT Station across the road. Huttons’ Lim declined to comment.
Next door to Midpoint Orchard is the former Orchard OG at 228 Orchard Road. The building has been leased to Amity Global Institute, which opened its new Orchard Road campus on May 29.
OG Pte Ltd, the owner of Orchard OG, has put the property on the market for sale at an undisclosed price, with Lim as the exclusive marketing agent.
A six-storey building, OG Orchard was built in 1979. It sits on a freehold site of about 8,870 sq ft. The future development could also have an underground link to Somerset MRT Station. OG has explored selling the building several times over the past five years. However, Lim declined to comment.
Concorde Hotel & Shopping Centre, majority-owned by HPL, will be launched for collective sale in 2H2024 pending URA’s SDI approval (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Orchard Road-Dhoby Ghaut makeover
Towards the end of Orchard Road, more ageing mixed-use developments are gearing up for collective sale. One of them is Concorde Hotel and Shopping Mall. Located at 100 Orchard Road, the hotel has 407 rooms, while the shopping mall has 98 strata shops.
Singapore-listed Hotel Properties Ltd (HPL) owns Concorde Hotel and 63 of the 98 strata shops in the mall. The building has a 99-year lease from Aug 17, 1979, according to HPL’s 2023 annual report.
The collective sale committee is seeking URA approval for the redevelopment of Concorde Hotel & Shopping Mall under the SDI. Savills is the marketing agent for the site, which is targeted for launch sometime in 2H2024. The indicative price is estimated at $800 million, excluding the land betterment charge.
Concorde Hotel & Shopping Centre is next to a 500m stretch of Orchard Road — between Buyong Road and Handy Road — that will be pedestrianised. The 1.3ha Istana Park will triple in size, incorporating the existing green spaces such as Dhoby Ghaut Green and the Penang Road Open Space.
“The pedestrianisation of parts of Orchard Road, including in front of the Istana, will create more room for vibrant enclaves and street-level activities to add excitement to the precinct and keep people coming back again and again,” says the Orchard Road Business Association spokesperson. Reducing cars on the road will also make it more pleasant, and add more life to Orchard Road, adds the spokesperson.
Behind Concorde Hotel & Shopping Mall is United House, at 20 Kramat Lane, where strata owners are making a collective sale attempt (Photo: Samuel Isaac Chua/EdgeProp Singapore)
More collective sales underway
Directly behind the Concorde Hotel is another ageing building, United House, at 20 Kramat Lane. The strata owners of the freehold office building have appointed Edmund Tie as the marketing agent for their collective sale.
Fronting Penang Road is Singapore Shopping Centre, where strata owners have also appointed Edmund Tie to handle their upcoming collective sale. The seven-storey, mixed-use development at 190 Clemenceau Avenue is opposite the Dhoby Ghaut MRT Interchange Station. The building sits on a 26,369 sq ft site with a 99-year lease from 1948.
The strata owners of Singapore Shopping Centre, which fronts Penang Road, are in the early stages of another collective sale attempt (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Singapore Shopping Centre’s last collective sale attempt was in February 2020 at a reserve price of $255 million, with provisional approval for the site to be rezoned as a hotel.
The wave of collective sale hopefuls and redevelopments are an indication that the Orchard Road rejuvenation is well underway.
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