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Tange design yet to get official approval: sources

Tenants at Specialists’ Shopping Centre and Hotel Phoenix are getting ready to move out around the middle of this year, but it remains to be seen how soon owner OCBC will start redeveloping the site, market watchers say.

For one thing, BT understands that Tange Associates’ proposed 20-storey design for a new hotel and mall project on the existing Specialists’ Centre/Hotel Phoenix freehold site is still pending approval from the Orchard Road Development Commission (Ordec).

The inter-government agency group’s nod is required as the proposed scheme exceeds both the 16-storey height limit and the maximum plot ratio allowed for the site.

In addition, amended banking regulations effectively bar OCBC from redeveloping Specialists’ Centre/Hotel Phoenix, say market watchers. The Banking (Amendment) Regulations 2004, which cover prescribed property-related businesses, allow property enhancement works in relation to a building which do not amount to demolition or reconstruction of the building, and which do not vary the gross floor area of the building by more than 20 per cent.

‘Clearly, any proposal to redevelop Specialists’ Centre involves tearing down the existing building and redeveloping the site, let alone the fact that the Tange Associates’ design involves a plot ratio said to be more than 20 per cent higher than the 6.62 based on Specialists’ Centre/Hotel Phoenix’s existing gross floor area,’ said a market watcher.

‘On the other hand, if OCBC were to merely refurbish or retrofit the property, that would be fine, going by the banking regulations. But this would not maximise efficiency given that the building is over 30 years old and its layout and efficiency (ratio of net lettable area to gross floor area) are dated,’ he added. An industry player suggested that OCBC should consider teaming up with Far East Organization and Australia’s Lend Lease group, which are developing separate mall projects on each side of Specialists’ Centre.

OCBC has already taken a 10 per cent stake in the Far East project. Perhaps the bank could consider selling Far East a lease for the Specialists’ Centre/Hotel Phoenix site, and Far East could then plough money for its redevelopment and even give OCBC a cut of the yield from managing the asset later, some analysts speculate.

‘That way, OCBC can still continue to own the freehold land on which the redevelopment takes place if there are quarters in the bank who feel the bank should not let go of such a prime property,’ added the industry player.

Another observer said that it also makes sense for OCBC to invite Lend Lease to participate in the redevelopment project - after all, they are famous for both project management and retail management. ‘It would be in the best interests of all three stakeholders - Far East, OCBC and Lend Lease - to work hand-in-glove, ensuring connectivity for the three projects and turning them into a strong enough magnet to rival CapitaLand and Sun Hung Kai’s Orchard Turn mall one MRT stop away,’ he added.

Lend Lease’s mall could be about five to six storeys above ground and possibly include three to four basement levels with about 300,000 square feet of net lettable area in total. Far East’s Orchard Central mall, slated to be ready in late 2008, will be 10 storeys high with two basement levels, adding up to about 390,000 sq ft of gross floor area.

When contacted yesterday, OCBC reiterated that it intends to hold on to the Specialists’ Centre/Hotel Phoenix property for long-term investment, but declined to elaborate further.

Source : Business Times - 28 Feb 2007