The Place Holdings aims to ‘unlock value’ by putting Realty Centre up for sale from $185 mil
By Cecilia Chow
/ EdgeProp Singapore |
The freehold site of Realty Centre is located next to the construction site of One Bernam development (right) [Photo: Samuel Isaac Chua/EdgeProp Singapore]
SINGAPORE (EDGEPROP) - The 12-storey commercial building Realty Centre located at 15 Enggor Street in Tanjong Pagar, part of Singapore’s CBD, has been demolished. Construction has yet to start on the site purchased en bloc by Singapore-listed The Place Holdings in April 2019 for $148 million. (See potential condos with en bloc calculator)
The former Realty Centre sat on a 11,000 sq ft, freehold site zoned for commercial use with a plot ratio of 5.6 and maximum height of 35 storeys. The purchase price translated to about $2,441 psf per plot ratio (ppr) at the time of the purchase.
In addition to the site, The Place Holdings also alienated three parcels of state land totalling 358.8 sq m (about 3,862 sq ft), bringing the total site area to 14,861 sq ft. Following the acquisition, the site is able to capitalise on its dual frontage along Enggor Street and Bernam Street. It is within walking distance of Tanjong Pagar MRT Station and the upcoming Prince Edward MRT Station slated for completion in 2026.
Realty Centre is situated between Anson Housse and One Bernam and is located opposite NewPort Residences, NewPort Plaza and NewPort Tower (Source: EdgeProp Landlens)
The acquisition of Realty Centre dovetailed with the URA announcement of the CBD Incentive Scheme in the Master Plan 2019. Under the CBD Incentive Scheme, the Realty Centre site is eligible for a bonus plot ratio of between 25% and 30% if there is a change of use to either hotel (25%), residential and commercial (25%) or residential with commercial on the first storey (30%).
The Place Holdings has obtained provisional permission from URA for the development of a 37-storey development with a two-storey commercial podium, and a 33-storey residential project with 114 units including sky terraces, swimming pool and ancillary facilities. There will also be three levels of basement carpark. The proposed gross floor area (GFA) is about 108,194 sq ft, equivalent to a plot ratio of 7.28 (excluding bonus GFA).
In the immediate vicinity of Realty Centre, rejuvenation is taking place. Next door is Anson House, which Hong Kong-based fund manager Arch Capital Management purchased in August 2019 for $210 million. Refurbishment has been completed, and the last remaining floor of office space is on the market for lease at $8.50 to $9 psf per month by exclusive marketing agency Brilliance Capital.
Anson House next door was sold to Hongkong-based fund manager Arch Capital Management purchased in Aug 2019 for $210 million. The building was refurbished and the remaining office space put up for lease, with the last floor now marketed at $8.50 to $9 psf per month (Photo: Samuel Isaac Chua/EdgeProp Singapore)
On the other side of Realty Centre, construction is underway at the upcoming One Bernam. The 99-year leasehold site was jointly purchased by Chinese developers Hao Yuan Investments and MCC Land for $440.9 million in September 2019. One Bernam is a mixed-use project with 351 condominium units, 13 serviced apartments on one floor and two floors of commercial space totalling 15,726 sq ft. Launched in May 2021, about 35% of the 351 units at One Bernam have been sold at an average price of $2,470 psf, based on URA Realis data. (Find Singapore commercial properties with our commercial directory)
Directly opposite One Bernam and Realty Centre is the former Fuji Xerox Towers at 80 Anson Road, which Singapore-listed property giant City Developments is in the process of demolishing. In its place will be the upcoming 45-storey, freehold mixed-use development with residences, services apartments and office, called NewPort Residences, NewPort Plaza and NewPort Tower. The 246-unit NewPort Residences is scheduled for launch sometime in 1H2023.
Further up on Anson Road is the former AXA Tower, where Alibaba and a consortium led by Perennial Holdings have obtained URA approval to build a 63-storey, mixed-use development in early August. Commercial buildings nearby, such as ABI Plaza and 78 Shenton Way, are also said to have received in-principle approval for redevelopment under the URA CBD Incentive Scheme.
Fuji Xerox Towers is being demolished to makeway for a new freehold, mixed-use development, NewPort Residences, NewPort Plaza and NewPort Tower. The new 246-unit NewPort Residences is scheduled for launch sometime in 1H2023 (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Divestment instead of redevelopment
The Place Holdings had targeted the sales launch of the Realty Centre development sometime in 2Q2023, based on its 1HFY2022 financial results announcement on Aug 4.
However, the Realty Centre site is now on the market for sale at a price of at least $185 million. The Place Holdings declined to comment for this story.
Cushman & Wakefield (C&W), which brokered the collective sale three years ago, has been appointed by The Place Holdings to handle the divestment of the asset by private treaty. C&W likewise did not wish to comment.
Artist’s impression of the upcoming development at 15 Enggor Street, a 37-storey mixed-use development with 33 storeys containing 114 residential units, two storey commercial podium and three levels of basement carpark (Source: Fact Sheet)
Besides developing a 114-unit residential project with a two-storey commercial podium and enhanced plot ratio of 7.28 under the CBD Incentive Scheme, a second option is for a redevelopment into a new mixed-use development with 40% commercial and 60% residential at a plot ratio of 7.0. A third option would be a new 100% commercial development based on the existing plot ratio of 5.6.
At $185 million, the land rate works out to $1,865 psf ppr, after including a development charge of $31.3 million and 8% bonus GFA for balcony space. If construction cost is included, this translates to a breakeven price in the range of $2,500 to $2,600 psf. That suggests a future selling price of about $2,800 psf, according to sources.
Focus on ‘sky screen’ business
Selling Realty Centre is expected to free up capital for The Place Holdings’ expansion into the “sky screen” business. The firm had signed a collaboration agreement with Stellar Lifestyle, a business arm of SMRT Corp, in late June 2022. The Place Holdings says it will invest $200 million in the L.I.F.E omnichannel ecosystem, which encompasses several platforms: the sky screen ecosystem, co-working, digital and advertising, technology applications and last-mile service.
Artist’s impression of the Singapore’s first sky screen, a suspended 200m long video screen that will be an enhanced version of The Place Sky Screen in Beijing (Source: The Place Holdings/Stellar Lifestyle)
In addition, The Place Holdings and Stellar Lifestyle are planning Singapore’s first sky screen, a suspended 200m-long video screen that will be an enhanced version of The Place Sky Screen in Beijing.
Just three months earlier in March 2022, The Place Holdings announced its plan to purchase 51% of the intellectual property rights associated with The Place and The Place Sky Screen at its mixed-use development of the same name in Beijing’s CBD. The acquisition is expected to provide recurring revenue of more than $10 million annually, and to give the company the rights to manage and operate the Beijing sky screen, which is “fundamental to our collaboration agreement with Stellar Lifestyle”, said the company in its 1HFY2022 announcement.
Built in 2006, The Place in Beijing is a mixed-use development with two prime office towers, high-end retail mall and a 250m x 30m sky screen or digital canopy with 7,500 sq m (80,729 sq ft) of LED lights. Its launch in 2007 made it a landmark in the city, and it is still considered one of the largest sky screens of its kind in Asia.
Built in 2006, The Place in Beijing is a mixed-use development with two prime office towers, high-end retail mall and a 250m x 30m sky screen or digital canopy with 7,500 sq m (80,729 sq ft) of LED lights (Photo: The Place Holdings)
Eye on unlocking value
“As we unlock the value of our development projects, we are making good progress in our ‘L.I.F.E’ Omni-Channel Ecosystem, particularly on Singapore’s first sky screen, and we are in the process of determining its location,” said Ji Zenghe, executive chairman of The Place Holdings in a statement on Aug 4.
Ji added: “With a clear, distinct business strategy that is aligned with the digital economy, we aim to create new business agility and drive value-creation across internal and external opportunities together with our strategic partners.”
The Place Holdings reported revenue of $596,000, and loss attributable to owners of $1.457 million in 1HFY2022. The group’s total assets stood at $257.71 million as at June 30, with development properties accounting for $211.86 million (82.2%). This does not include a loan to an associate of $20.48 million, which is part of The Place Holdings’ shareholder contribution to the Sceneca Residence development project.
Sceneca Residence is a 265-unit condominium project with 21,528 sq ft of retail podium, which will be linked to Tanah Merah MRT Station next to it (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The Place Holdings has a 20% stake in Sceneca Residence through the project company MCC Land (TMK), based on a shareholders’ agreement signed in December 2020. MCC Land has a 51% stake in MCC Land (TMK) while Ekovest Development holds 29%.
Sceneca Residence is a 265-unit condominium project with 21,528 sq ft of retail podium, which will be linked to Tanah Merah MRT Station next to it. MCC Land had won the site for $248.99 million in November 2020, after submitting the highest of 15 bids at the close of the Government Land Sale tender in late October 2020.
Back in December 2020, MCC Land and The Place Holdings had also entered into a long-term agreement to co-develop projects. “The strategic framework agreement signed recently has set the stage for both companies to join forces together for a long-term working relationship and it is part of our strategy to maximise the returns on our property developments and diversify our income portfolio,” Ji of The Place Holdings had said in a statement then.
At the signing ceremony for the collaboration agreement between MCC Land and The Place Holdings for the redevelopment of Realty Centre (from left): Tan Zhiyong, CEO of MCC Land; Ji Zenghe, executive chairman of The Place Holdings; and Fan Xianyong, CEO of The Place Holdings (Photo: The Place Holdings)
Optimising structure, assets
Sceneca Residence was issued with a no-sale licence by URA’s Controller of Housing in May this year. However, MCC Land will be applying for a sale licence in October 2022. “Pending a successful sale licence being issued after our application, we will launch as soon as we can thereafter,” says an MCC Singapore spokesperson.
Following a shareholders’ agreement in March 2021, The Place Holdings and MCC Land are also partners in the Realty Centre development via New Vision Holding (NVH). The Place Holdings has a 51% stake in NVH, with MCC Land taking a 30% stake, and Sun Card Ltd, the remaining 19%. Sun Card is a Hong Kong corporation in which The Place Holdings’ executive chairman Ji, and Fan Xianyong, The Place Holdings executive director and CEO, indirectly hold a 95% shareholding interest.
In China, The Place Holdings has another development project through its 80%-owned subsidiary, Tianjie Yuntai Wanrun Property Development Co. The company is developing the Mount Yuntai Integrated Tourist Township project. “Due to poor property market sentiment throughout China, the development of Project Wanrun had slowed,” the company said in its Aug 4 statement on its 1HFY2022 results.
Artist's impression of Mount Yuntai Integrated Tourist Township, where the group acquired a 270,500 sq m (2.9 million sq ft) land site located at the entrance of Mount Yuntai Scenic Area in 2018 (Picture: The Place Holdings)
The Place Holdings is now focused on “developing digital and intelligent new business platforms serving small and medium-sized enterprises”, and on building Singapore’s first sky screen, said The Place Holdings CEO Fan Xianyong, according to the minutes of the company’s annual general meeting on April 28.
“The company will optimise the structure and assets of existing projects such as development projects at Tanjong Pagar [Realty Centre], Singapore and Mount Yuntai, China,” Fan added. “This is to ensure that the company’s strategy will be clearer, its main business will be more competitive, and its growth will be more rapid.”
The divestment of the Realty Centre site is the first step in The Place Holdings’ plan towards optimising its asset holdings. For a potential buyer, the Realty Centre site “provides a bite-sized opportunity with a palatable quantum”, according to a source. It is also a freehold site in a CBD location with predominantly 99-year leasehold sites, the source adds.
Check out the latest listings near Realty Centre, Enggor Street, Tanjong Pagar, Sceneca Residence, Anson House, One Bernam, AXA Tower, ABI Plaza, 78 Shenton Way, Tanjong Pagar MRT Station, Tanah Merah MRT Station
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