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CapitaLand, partners sell Raffles Place building for $730m or $2,780 psf

CapitaLand and its partners have sold their stakes in Chevron House (formerly known as Caltex House) at Raffles Place in a deal that values the leasehold office block at $730 million or $2,780 per square foot of net lettable area.

Chevron House

This sets a new record for an entire office building, surpassing the $2,650 psf set earlier this year for the freehold 1 Finlayson Green. Chevron House stands on a site with a remaining lease of about 81 years.

Market watchers are wondering if a new record price will soon be achieved, possibly for Hitachi Tower next to Chevron House and in which CapitaLand also has a 50 per cent stake.

The 999-year leasehold Hitachi Tower, which faces Collyer Quay, was earlier reported to have attracted a top bid of $3,200 psf of net lettable area, following an expression of interest exercise.

However, industry talk now is that negotiations with the top bidder may have met with some hitches - although it is suggested that this does not necessarily mean the deal is off. ‘It could just mean that negotiations may now be open with the other bidders,’ one observer said.

When contacted, a CapitaLand spokeswoman said: ‘The owners of Hitachi Tower are negotiating with several parties to divest their interests, and we will make the appropriate announcement if any definitive agreement has been signed.’

CapitaLand owns Hitachi Tower jointly with National University of Singapore.

The property giant declined to identify the party to whom it and its partners have sold their stakes in Chevron House. But it is believed to be a foreign fund.

‘Globally, in the real estate investment market, it is the international funds that are buying, because that’s where the capital is being raised. And you have a whole variety of investors - including private equity, savings (including pensions), professional investment groups,’ an industry player said.

Jones Lang LaSalle is understood to have brokered the sale of Chevron House.

CapitaLand owns a 50 per cent stake in Chevron House, with IP Property Fund Asia and NTUC Income Insurance Co-operative each holding 25 per cent. The three parties own their stakes in Chevron House through Savu Properties Ltd and under yesterday’s deal, are selling their stakes in this company.

The completion date of the sale is Sept 24. ‘Upon completion, CapitaLand will recognise in its group consolidated accounts a gain of approximately $150.8 million,’ the group said yesterday.

The average prime office capital value rose 117 per cent year-on-year in the second quarter of this year to $2,500 psf, while average monthly Grade A office rental value in Q2 this year was $13.10 psf, up 92.6 per cent from the same period last year, according to CB Richard Ellis data.

Source : Business Times - 31 Aug 2007

Separately, URA launches tender for Sin Ming light industrial site

SOILBUILD Group Holdings has bought the freehold Margate Mansion off Meyer Road for $58 million through a collective sale.

The deal reflects a unit land price of $882 psf per plot ratio including an estimated $6.5 million development charge (DC) based on July 18, 2007 DC rates. Provisional permission for a new development has not been obtained, so the $6.5 million estimated DC quantum has not been locked in.

Soilbuild will have to pay DC based on Sept 1, 2007 rates, which most market watchers say will shoot up in tandem with sharp gains in residential land values over the past six months.

Asked why Soilbuild announced a deal just a day before the latest DC rates are announced, the group’s executive director Low Soon Sim said: ‘We have factored in a 20 per cent rise in DC rates for the area come Sept 1, and we see the potential of the area. This is a District 15 site located in the much sought-after Meyer Road residential enclave.’

Margate Mansion’s collective sale, which is subject to approval by the Strata Titles Board, was brokered by CB Richard Ellis.

The 34,804 sq ft site has a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area. Assuming an average size of 1,500 sq ft per unit, the site can be redeveloped into a new project up to 24 storeys high, with a total of 48 units, Soilbuild said in a statement yesterday.

The project may be launched towards the end of next year.

Separately, the Urban Redevelopment Authority launched a tender yesterday for a 5.13-hectare industrial site in Sin Ming Lane. The land has a 2.5 plot ratio and is being sold on 60-year leasehold tenure. Colliers International director (industrial) Tan Boon Leong reckons the top bid is likely to be in the $60 psf per plot ratio range. This would translate to a breakeven cost of $230-250 psf for the completed development.

‘If a developer wants to maximise profit, he will build a ramp-up development,’ Mr Tan said.

The site is zoned for Business 1 use and can be used for clean and light industrial use. It is within the established Sin Ming Industrial Estate.

The tender for the site, which is on the confirmed list of the Government Industrial Land Sale Programme, closes on Oct 24.

Source : Business Times - 31 Aug 2007

Price eclipses $2,650 per sq ft paid for 1 Finlayson Green by Hong Leong Group

OFFICE prices in Singapore have reached a new record high with the sale of Chevron House in Raffles Place.

The 33-storey building fetched $730 million, or $2,780 per sq ft (psf) of net lettable area, developer CapitaLand said in a statement yesterday. The buyer is believed to be a foreign fund.

CapitaLand has a 50 per cent stake in the property. The rest is held by NTUC Income Insurance Co-operative and IP Property Fund Asia, which is managed by CapitaLand and ING Real Estate.

The price of Chevron House eclipses the last known record set for the sale of an office building - 1 Finlayson Green - which the Hong Leong Group sold in June for about $230 million, or $2,650 psf.

Another record, however, is already in the works.

Sources say that Hitachi Tower in Collyer Quay, also partly owned by CapitaLand, has received bids of $3,200 psf to $3,400 psf, and an official sale announcement is expected soon.

Chevron House’s sale comes just a few days after CapitaLand paid $590.3 million for the remaining 50 per cent stake in Eureka Office Fund, which owns One George Street. This valued the development at $1.2 billion, or about $2,700 psf.

Property watchers said Chevron House’s price is particularly stunning because it is on a 99-year lease that started in 1989, while 1 Finlayson Green is a freehold property.

Mr Donald Han, managing director of property consultancy Cushman & Wakefield, said, however, that the price for Chevron House ’seems fairly in line with market rents’.

Asking rentals for top-grade offices in Raffles Place are hovering at $15 psf to $18 psf per month, he said. This puts current yields for such offices at ‘anything from 2.8 per cent to 3.5 per cent’.

Market sources said that based on Chevron House’s sale price, the yield is about 3 per cent. Mr Han puts the yield of 1 Finlayson Green at about 2 per cent and that of One George Street at between 2.5 per cent and 2.8 per cent.

Prices and rentals of Singapore’s offices have been soaring in recent months, due to a shortage in quality buildings and growing demand from occupiers and investors alike.

Indeed, The Straits Times understands that about half a dozen parties expressed interest in Chevron House via a private tender, and it was a close contest between the top two or three bids.

CapitaLand said it will book a gain of about $150.8 million from the sale of its stake in the building.

The developer bought Chevron House - then known as Caltex House - from tycoon Ong Beng Seng in 1999, along with Hitachi Tower which is behind it. CapitaLand paid just under $670 million for the two buildings.

Source : Straits Times - 31 Aug 2007

It was buy, sell and go overseas on the local property newsfront yesterday.

In the prime office market, CapitaLand has sold its entire 50-per-cent stake in Chevron House for $366.4 million, booking a gain of $150.8 million.

In the en bloc scene, the 45 owners of Margate Mansion in the East Coast area did not get quite what they were hoping for. Their collective sale garnered $58 million, below the asking price of $63.8 million.

The buyer — mainboard-listed Soilbuild Group Holdings — said yesterday it had signed the option to buy the freehold 10-storey apartment block, which will be transformed into a luxurious 48-unit project with up to 24 floors. On Meyer Road, the site spans 34,802 sq ft and can be redeveloped to a maximum gross floor area of 73,088 sq ft.

Based on an estimated development charge of about $6.5 million for the site, the acquisition cost works out to be about $882 per square foot per plot ratio, said Soilbuild.

The collective sale comes after proposals earlier this week to amend en bloc sale laws. The changes, expected to take effect in early October, are aimed at raising transparency and safeguarding the interests of all stakeholders but could also spell higher costs and a lengthier sale process.

Meanwhile, Frasers Hospitality’s third serviced residence in Bangkok will open in October, the Singapore-based serviced apartment operator said yesterday.

Source : Today - 31 Aug 2007

No wonder complaints against them are on the rise this year

MY LOONY neighbour has a new hobby: bombing people with the remains of his packed lunch.

Every time I go to the coffeeshop, I pass yet another burst plastic bag, rice and curry oozing from it. It’s enough to make me turn home, lunch forgotten. As usual, I get no sympathy if I complain about Mr Loony. “Move lah! After all, you’re only renting that place,” my friends say.

“But I like the location and the landlord’s really nice,” I protest. “Besides, we can’t afford to rent or buy anywhere else now that property prices are stratospheric.” Okay, that’s partly true.

The real reason is that I’m afraid of real-estate agents. I’ve had enough problems dealing with them to last me a lifetime.

Before I met my husband, I was living in a small studio apartment, which I had scrimped to buy. It was so tiny that when we married, we had to find a bigger place. We found our present flat via a friend’s recommendation.

At that time, the property market was so bad that I would have had to pay the bank money if I sold the studio. So for a long time, it lay vacant, a very expensive storeroom. “Rent it out,” urged everyone I knew. “It’s so simple. Just get a property agent.”

Novice landlady that I was, I believed them. Bad idea.

The first agent that I met took one look at the place then said: “It’s going to be tough to rent out. Why don’t you sell?” When I insisted I wanted to rent, he grudgingly listed the unit.

In three months, he showed the unit to only one potential tenant. “See? Very hard to rent. Better sell,” he reiterated. He kept at it until the penny dropped: He wasn’t interested in helping me rent out the place because he’d get only one month’s rent in commission.

However, if I sold it he would get tens of thousands of dollars in commission. When he realised I couldn’t be bullied into selling, he tore up our contract.

The second agent was even worse. She looked at the place, took the key and promised to list it, then stopped taking my calls. Six months later, when I finally caught her on her office phone, she said airily: “Oh, I lost your keys.” No apology for losing an expensive electronic gate pass. I had to threaten her with a lawsuit before she compensated me for the loss.

Fed up, I listed the studio in the classifieds myself. A few calls were from potential tenants but most were from agents, all asking me to sign up exclusively with them — which meant paying them commission if they found me a tenant. “I advertised the studio myself. Why do I need you?” I asked.

They hemmed and hawed. Finally, one guy, more honest than the rest, confessed: “If I’m the agent for only one party, I get one month’s commission. But if I also become your agent, I get one month from you and one month from the tenant.”

So that was the game. Sensing I was a newbie to the game, these double agents were moving in with a view to a kill. Forget about having my best interests at heart — they were all just looking out for number one.

Given my bad experiences, I was not surprised to hear that complaints against estate agents have been increasing.

The Consumers Association of Singapore fielded 57 complaints from January to July this year, compared with 32 in the same period last year. There were 40 complaints lodged with the Singapore Accredited Estate Agencies in the first seven months of 2007, up from 31 last year.

I’m amazed that the numbers aren’t any higher, especially since the property market is so good now. It stands to reason that the hotter the market is, the more agents join the fray. The more agents there are, the higher the proportion of bad hats.

Thankfully, my tenant search had a happy ending. After fending off countless agents, I received a call one day. “Don’t tell me, you want me to hire you,” I said wearily.

“Why should you?” came the surprising answer. The agent got the place rented out in three days — at $200 more per month than I’d expected to get — without a commission.

Hey, maybe she’s the answer to my loony-neighbour problem. I’ll keep you posted on any developments.

Tabitha Wang doesn’t believe in fining unscrupulous estate agents. She prefers to bomb them with packets of curry rice.

Source : Today - 31 Aug 2007