International Plaza to launch for collective sale at $2.7 bil
By Cecilia Chow
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - The biggest project to be put up for collective sale, International Plaza, has been launched for tender at a reserve price of $2.7 billion. If successful, it is likely to set a precedent for other mixed-use developments attempting a collective sale.
It will also smash the previous record set by the former Farrer Court in 2007 for the biggest collective sale deal of $1.3388 billion, when it was sold to a CapitaLand-led consortium. It has since been redeveloped into the 1,715-unit d’Leedon.
A mixed-use development, International Plaza has an existing plot ratio of 19.24 and gross floor area (GFA) of about 1.445 million sq ft. It sits on a 75,089 sq ft site with a prominent 200m frontage at the junction of Anson Road and Choon Guan Street. As the 99-year lease on the land starts from 1970, there are only 48 years remaining on the lease. A differential premium and lease-upgrading premium of about $800 million is payable. The reserve price therefore translates to a land rate of about $2,448 psf per plot ratio (psf ppr), says Swee Shou Fern, Edmund Tie’s executive director of investment advisory, the appointed marketing agent for International Plaza.
Outline application for a 25% uplift in GFA under the URA CBD Incentive Scheme has been submitted. If the uplift in GFA is approved, the redevelopment can be intensified with a higher GFA of about 1.8 million sq ft and plot ratio of 24.06. This will pare down the land rate to $2,170 psf ppr.
The site is zoned for commercial use under the URA planning guidelines, which means that at least 60% of the GFA is to be designated for office use. The remaining 40% of the GFA can be allocated for other uses including residences, serviced apartments or hotel. “The government wants to promote live-work-play in the CBD,” says Swee.
The commercial zoning for International Plaza implies that the developer will not be subjected to additional buyer’s stamp duty (ABSD) nor the sell-by-date of 51⁄2 years for the residential units. The developer will also not be subjected to the qualifying certificate regime. (See: Find Singapore commercial properties with our commercial directory)
Swee: International Plaza is the gateway to Tanjong Pagar, which is the most exciting area in the CBD right now (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Interest from ‘the big boys’
Since the announcement on Aug 6 that 80% of the owners representing 800 out of the 962 strata-ti- tled units at International Plaza have given their consent for the collective sale, there has been a lot of interest from “the big boys”, observes Swee. “Given the ticket size, I would expect some of the developers to bid as a consortium.” She expects heavyweights from overseas to participate in the tender too. The tender exercise will be conducted over a three-month period from Sept 1 to Nov 30.
International Plaza was a pioneer mixed-use development in the CBD with live-work-play components within a single, 50-storey tower. The development sits on a 99-year leasehold land plot that was purchased under the third government land sales (GLS) programme in 1969. When completed in 1976, the 190m-tall building was considered one of the three tallest skyscrapers in Singapore.
The existing development has a seven- storey triangular podium with a retail mall of 192 strata-titled shops on the first three levels and a carpark from the fourth to seventh levels. On top of the seven-storey podium is an octagon- shaped, 43-storey block, with 559 strata office units occupying the first 27 floors and 209 apartments spanning the top 14 floors. Recreational facilities for residents include a tennis court and a swimming pool. There are two penthouses with roof gardens on the topmost level. The swimming pool and the carpark have their own respective strata titles, bringing the total number of strata units to 962.
The developer of International Plaza was the late real estate tycoon, Cheong Eak Chong, who is said to have developed the former Hyatt Regency Singapore (now Grand Hyatt Singapore), the former Pacific Mansion (the upcoming The Avenir), and the original Hyatt Regency Hong Kong, among other buildings of the 1970s.
Gerald Cheong (left), whose grandfather developed International Plaza and whose family is a substantial shareholder of the development, is secretary of the collective sale committee; and Kevin Liang, chairman of the collective sale committee at International Plaza, and a long-term strata owner of strata office units for 24 years (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Legacy owners
“Being 51 years old, International Plaza continues to have a number of long-term and legacy owners,” says Kevin Liang, chairman of International Plaza’s collective sale committee (CSC). “Some companies are being run by the second- or third-generation family members.”
Members of the Cheong family continue to own a substantial stake in International Plaza, both in terms of share value and strata area. A third-generation family member of the Cheong family is Gerald Cheong, a director of Tian Teck Investment Holding, a real estate investment and development firm based at International Plaza. He has been appointed secretary of the CSC at International Plaza. His father, Hooi Hong Cheong, is chairman and CEO of Tian Teck Investment.
It was CSC chairman Liang who mooted the idea of a collective sale exercise in 2018. Until then, no collective sale exercise had been conducted. “We had not considered a collective sale in the past, until Kevin Liang brought up the proposal,” says Cheong. “After an internal assessment, we thought it worthwhile to pursue the collective sale.”
The backing of the Cheong family was “a blessing”, says Liang. “They are substantial holders and have veto power,” he adds. The timing for the collective sale was right as the building is already 45 years old, and the lease is already past the half-way mark at 51 years, he relates.
Liang himself is a legacy owner at International Plaza. His father had started his business at the building, where he had also purchased an office unit. “I used to come to International Plaza when I was younger, and it must have formed an impression,” he recalls. “When I started my own business in 1993, one of the first things I decided on was to locate my business at International Plaza.”
From renting an office unit, Liang progressed to purchase his first strata office unit in International Plaza in 1997. He owns seven office units at International Plaza today. Liang is the founder and CEO of EPS Consultants and EPS Computer Systems, which specialise in IT recruitment, IT staffing and outsourcing services. Today, EPS Group has close to 1,000 employees in Singapore and the region.
Including the office units at International Plaza, EPS owns 20 strata-office units across five commercial buildings within and near the CBD. They include strata-office units at SBF Centre on Robinson Road. When SBF Centre was completed in 2016, EPS Group’s operations were relocated to the new premises. However, he continues to own the seven units at International Plaza for long-term rental income. “A lot of people at International Plaza are like me,” says Liang. “We started our businesses here. And as our business expanded and we moved elsewhere, we still retain our units here.”
View of the city skyline from one of the penthouses of International Plaza (Photo: Samuel Isaac Chua/EdgeProp Singapore)
‘Ultra-prime location’
The CSC for International Plaza was formed in October 2018 and Edmund Tie was appointed the marketing consultant in February 2019. The process of getting owners to sign the collective sale agreement began on Oct 5, 2019, and lasted until end-March 2020 (before the start of the “circuit breaker” from April 7 to June 2, 2020). During the five months, about 72% of the owners by strata area representing 65% share value signed the collective sale agreement.
“The process was quite fast, considering the size of the development and the constraints we faced,” says Liang. “Some of the owners are companies listed overseas, and some are individuals living overseas.” To some extent, the pandemic may have motivated some owners to support the collective sale, adds Liang.
Even with the collective sale underway, building refurbishments have continued, says Cheong. They include façade facelifts, lift upgrading, repairs of spalling concrete and upcoming escalator replacements, he adds.
As the building has continued to be well-maintained despite its age, it has been able to hold its capital values and rents. Last month, a 398 sq ft retail unit on the second level changed hands for $1.025 million ($2,574 psf), while a 936 sq ft, office unit on the 28th floor was sold for $1.8 million ($1,926 psf). In May, a 1,033 sq ft, two-bedroom apartment on the 39th floor fetched $1.2 million ($1,161 psf), based on URA Realis data.
“International Plaza is uniquely located in the heart of the CBD, and right next to the Tanjong Pagar MRT Station,” notes Liang. “The bus stop and taxi stand is right at the doorstep. With its ultra-prime, ‘crème de la crème’ location in the heart of Tanjong Pagar precinct, International Plaza is in a class of its own. This will give the successful buyer the unique opportunity to develop one of the most iconic, trophy properties in Singapore.”
Cheong agrees: “This is in line with Singapore government’s plan to rejuvenate the city centre so that it is not only a place to work in, but also a vibrant place to live and play in.”
View of the adjacent Guoco Tower and the urban park (Photo: Samuel Isaac Chua/EdgeProp Singapore)
‘Last piece of the jigsaw puzzle’
Edmund Tie’s Swee sees the redevelopment of International Plaza as “arguably the last piece of the jigsaw puzzle in the rejuvenation of the Tanjong Pagar precinct”. Adjacent to International Plaza is Guoco Tower, an integrated development by GuocoLand, which is the reigning tallest tower in Singapore at 290m. Perched on top of the 38-storey Grade-A office tower is the 181-unit luxury residences of Wallich Residence, which spans the 39th to 64th floors of the skyscraper. There is also a retail podium linked underground to the Tanjong Pagar MRT Station and luxury hotel Sofitel Singapore City Centre.
Directly across the road, AXA Tower will be redeveloped by a Perennial-led consortium of investors and Alibaba, into an integrated development with commercial retail, office, hotel and residential use.
Maxwell House, about 500m away, was sold en bloc to a consortium comprising SingHaiyi, Chip Eng Seng and Chuan Investments. It will be redeveloped into a mixed-use development with “a new live, work, play concept”, according to Raymond Chia, Chip Eng Seng Corp’s group CEO. It will have 330 residential units, serviced apartments and a retail podium with F&B units of more than 46,000 sq ft. (See: See potential condos with en bloc calculator)
Further down the road from International Plaza is Fuji Xerox, which City Developments Ltd (CDL) announced will be redeveloped into a 47-storey, integrated development with residential, office, retail and serviced apartments.
The URA recently launched the Marina View GLS site, with its tender closing on Sept 21. The 99-year leasehold white site is expected to be redeveloped into a new mixed-use development with about 905 residential units, a 540-room hotel and 2,000 sq m (21,530 sq ft) of commercial space. The minimum bid for the site is $1.5 billion.
“The planning parameters for the GLS site at Marina View is very different from International Plaza,” says Edmund Tie’s Swee. “The Marina View site is largely residential with hospitality component.” As a white site, it is subjected to ABSD, she notes.
Over the next decade, new projects and redevelopment schemes will continue to transform the area. (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Tanjong Pagar — ‘the biggest hub in the CBD’
According to JLL in its research report on Aug 21, policy efforts to encourage the development of a work-live-play in the CBD also resulted in a significant increase in residential, hotels and serviced apartments, especially in the Tanjong Pagar precinct, where over 50% of homes and over 30% of the hotel/serviced apartment stock in the CBD are located.
“The Tanjong Pagar precinct has traditionally been seen as secondary to Raffles Place and Marina Bay, with older office buildings erected on smaller footprints and being home to few- er multi-national corporations,” according to JLL. “This has changed in the last five years. Office stock in Tanjong Pagar has increased by 27% and its critical mass now outstrips both Raffles Place and Marina Bay, making it the biggest hub in the CBD.”
Over the next decade, new projects and redevelopment schemes will continue to transform the area. Prime office buildings are expected to make up 45% of Tanjong Pagar’s Grade-A office stock in 2027, up from 34% currently. The number of homes, hotel rooms and serviced apartments will also grow by 28%, based on projects in the pipeline.
“As rents and capital values are expected to continue to rise over the next five years, we expect land values to continue to appreciate in this locality,” says Regina Lim, JLL head of Asia Pacific Capital Market Research. “Due to the lack of government land sale sites for commercial use released in the CBD, developers will likely have to turn to redevelopment sites in the private market to create new office supply.”
This bodes well for International Plaza in its collective sale bid. “International Plaza is the gateway to Tanjong Pagar, which is the most ex- citing area in the CBD right now,” says Edmund Tie’s Swee. The new development will have a height of 250m, which will ensure that “high-floor units will have panoramic views of the city skyline”, she adds
Check out the latest listings near International Plaza, Guoco Tower, Wallich Residence, AXA Tower, Maxwell House, Fuji Xerox Towers, Tanjong Pagar MRT Station
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