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Amid a quiet property market, NTUC Income is selling a small commercial property in Beach Road that could fetch around $24 million to $26 million.

Beach Junction, at 67 Beach Road, is a 999-year leasehold building opposite Shaw Towers. It sits at the junction of Beach Road and Middle Road.

The six-storey development has a net lettable area of about 19,000 sq ft and is fully tenanted.

More than half of the leases expire this year, which means there is potential for near-term rental appreciation, according to marketing agent CB Richard Ellis.

‘This is also a unique opportunity for owner-occupiers looking for their own building in a very accessible location,’ it said.

The property is served by City Hall and Bugis MRT stations. Accessibility will be enhanced by the completion of Esplanade station on the Circle Line by 2010.

New investors or owner-occupiers will also be able to give the building a new name.

An industry source told BT that the site is worth about $1,300-$1,400 psf.

Besides being close to the huge, eco-friendly South Beach mixed project by a City Developments-led consortium, Beach Junction is expected to benefit from plans for the nearby Ophir Road/Rochor Road corridor, which will be transformed into a commercial node with offices, hotels and supporting uses.

Expression of interest for Beach Junction closes at 3pm on June 5.

Source : Business Times - 16 May 2008

Price will be over $800m; CMT eyeing synergies with Plaza Singapura: sources

The race to snap up The Atrium @ Orchard is said to have narrowed to two parties: a US fund, and a unit of CapitaLand group, possibly CapitaMall Trust (CMT), which owns Plaza Singapura next door. The price is understood to be in the region of $2,200-$2,300 per square foot of net lettable area (NLA). Based on the property’s total NLA of around 370,000 sq ft, the asset would be priced at over $800 million.

The property is being sold by Singapore Land Authority (SLA).

BT understands a deal is in the process of being sewn up.

While some analysts questioned the rationale behind CMT’s interest in a predominantly office development, seasoned property investors said CapitaLand or CMT would be the most logical buyer of the asset, given the synergies that can be drawn from owning the Plaza Singapura mall.

It can also reposition The Atrium, which is a predominantly office development, to have a bigger retail component, given its Orchard Road frontage.

The expression-of-interest exercise for the Grade A office property closed on Feb 22 and is believed to have attracted a number of offers. The two highest bidders - the US fund and CMT/CapitaLand - were selected to proceed with due diligence. Industry players do not seem to know much about the US fund or its plans for the property.

SLA will issue a fresh 99-year leasehold tenure for the property from mid-2008, according to earlier reports. The Atrium comprises two office towers, seven and 10 storeys high, with ground-floor retail space.

Currently, The Atrium’s retail component is confined to only about 10,000 sq ft out of the total 370,000 sq ft NLA.

Some feel that the eventual buyer of The Atrium may introduce more shop/ restaurant space into the development given its location in Singapore’s main shopping belt. One way would be to decant space from the upper floors and create higher-value retail/ restaurant space on the lower levels - a tried-and-tested CMT asset enhancement formula. ‘Another way would be to punch an atrium into the development and install escalators to bring shoppers up to the first few levels of the property. There may also be scope to introduce retail space in the basement,’ a market watcher suggested.

However, it may take a while before such plans are executed due to the current office crunch and ongoing leases in the property.

‘If CapitaLand Retail/ CMT end up with The Atrium, there’ll also be scope to better connect it with the group’s Plaza Singapura mall. Perhaps they could buy/lease state land between the two properties and build low-rise facilities suitable for, say, alfresco dining. Extending retail activities closer to Orchard Road would also help to draw more shoppers to Plaza Singapura,’ an industry observer said.

Completed in 2002, The Atrium’s current average monthly rent (based on existing leases) is understood to be below $6 psf - translating to a passing net property yield of just over 2 per cent. However, BT understands this could go up to more than 3 per cent within the next 12 months.

CMT is currently trading at about 4 per cent distribution yield on the stock market. Some suggested using a significant debt component to fund the acquisition. As at March 31, 2008, CMT had an asset size of about $5.9 billion and a gearing ratio of 35.3 per cent. CMT could fund the acquisition of The Atrium entirely through debt and still not exceed 45 per cent gearing at trust level. ‘If the cost of funding is sufficiently below The Atrium’s net property yield, the acquisition could still be immediately yield accretive to CMT. If not, there’s always the possibility of the property being initially acquired by CapitaLand Retail and warehoused for asset enhancement and other yield- boosting exercises before being offered to CMT,’ an analyst suggests.

The $2,200-2,300 psf price currently being negotiated is lower than the ‘above $2,700 psf’ price tag indicated at the start of the property’s marketing campaign in January. However, sentiment in the office investment market has weakened, because of difficulty in securing debt funding, and concerns of surging supply post-2011.

The asset is said to be stuck with some long leases locked at pretty low rental rates. Tenants include Temasek Holdings, Barclays and MTV Asia.

Source : Business Times - 14 May 2008

Possibilities include power stations and logistics centres beneath the surface

Singapore is looking at building underground power stations, water reclamation plants, wafer fabs and R&D labs, data centres, warehouses and port and airport logistics centres to free up surface land for other economic uses.

Industrial landlord Jurong Town Corporation has called a tender for a wide-ranging ‘underground rock cavern (URC) usage feasibility study’ to see how best caverns beneath the island can be used.

The consultant awarded the study will have to work with various government agencies on possible uses for the caverns.

For instance, it will have to work with the Energy Market Authority on power stations, the Civil Aviation Authority of Singapore on airport logistics, or the Public Utilities Board on water reclamation plants.

The study will cover such ’space, technical and functional requirements, operation and maintenance requirements and identification of issues of concern’, the tender document says.

The tender, called on Friday last week, closes on June 6. Due to the specialised nature of the project, only tenderers with proven URC expertise and experience are eligible.

The winning consultant will have to identify and study proven URC usage in other countries and determine the technical and operational feasibility of such usage here.

The consultant will also have to look at the environment, health and the likely public reaction on such matters as radiation and pollution, harmful airborne particles and damage to existing buildings or infrastructure, among other things.

A JTC spokeswoman said yesterday JTC will be the facilitator for the multi-agency study. ‘The study will look at possible uses for URCs as well as costs,’ she said. ‘The latter include costs for excavation and facility construction for each specific use.’

JTC declined to say which areas of Singapore have potential for URCs. ‘The latest feasibility study is looking just at usage, and not sites,’ the spokeswoman noted.

Singapore has so far used underground caverns for munitions storage for the defence forces. It blasted caverns out of granite beneath the disused Mandai Quarry.

And it is currently constructing Phase 1 of the $700 million Jurong Rock Cavern (JRC) project beneath Jurong Island to store 1.485 million cu m of crude oil and oil products like naphtha, condensate and gas oil.

JRC will be used by petrochemical companies such as Jurong Aromatics Corporation, which is building a US$2 billion aromatics complex and is the first committed customer.

The first of five caverns being built under Phase 1 will start operating at end-2010. Phase 2 of the project will add another 1.3 million cu m of storage.

In March, when Defence Minister Teo Chee Hean commissioned the underground munitions facility at Mandai, he said it would free up 300 ha of land - half the size of Pasir Ris Town - and need 20 per cent less manpower to operate than a surface facility.

Likewise, JRC will free up 60 ha of surface space - bigger than Bishan Park - to accommodate the storage needs of the oil industry here.

Land on Jurong Island is being snapped up by new petrochemical investors. BT understands that no more land is available from JTC for above-ground oil storage terminals, after Hin Leong’s Universal Terminal and Emirates National Oil Company’s Horizon Terminal.

Industrial landlord Jurong Town Corporation has called a tender for a wide-ranging ‘underground rock cavern usage feasibility study’ to see how best caverns beneath the island can be used.

Source : Business Times - 13 May 2008

Another landmark near Orchard Road may soon get a facelift: Channel NewsAsia understands that Shaw Organisation is considering a major redevelopment of Shaw House (picture) and its neighbouring Shaw Centre, with work to possibly start in the later half of next year.

According to sources, an official announcement is expected by August. The news comes even as some tenants have moved out in recent months following a spike in rentals from $6 to as much as $16 per square foot.

Plans are reportedly in the pipeline to expand Shaw Organisation’s Lido Cineplex, and to add more retail space. The corporation is understood to be in talks with architects. But it has not decided if the redevelopment plans should include its office and retail spaces in Shaw Centre.

Market watchers said it is likely the new site would include new residential spaces, but they do not expect the redevelopment works to have a big impact on retail space and shop rentals.

Said Knight Frank’s Mr Nicholas Mak: “In about 12 months, we’re going to see some new developments coming up on Orchard Road. So, if a major retail mall were to temporarily be taken offline, I think that vacuum could be filled by some of these new malls.”

Source : Today - 13 May 2008

Another landmark near Orchard Road may soon get a facelift. Channel NewsAsia understands that Shaw Organisation is considering a major redevelopment of Shaw House and its neighbouring Shaw Centre.

According to some sources, an official announcement is expected by August.

The news comes even as some tenants have moved out in recent months following a spike in rentals.

Shaw House has been a major landmark near Orchard Road for years - but it may soon take on a different look.

According to sources, plans are in the pipeline to expand Shaw Organisation’s Lido Cineplex, and to add more retail space.

Channel NewsAsia understands that Shaw Organisation is currently in talks with various architects on its redevelopment plans.

But it has not decided if this would include its office and retail spaces in Shaw Centre.

The tenants have not been informed officially, although they have heard word on the grapevine.

They declined to be interviewed on camera.

The present Shaw House was opened in 1993, and includes anchor tenant Isetan.

It adjoins Shaw Centre, which has retail, F&B and office space, as well as a bank.

Retail rentals there have jumped from S$6 a square foot to as much as S$16 a square foot in recent months, and a number of tenants have moved out.

Market watchers said that it is likely the new site may even include new residential spaces.

Nicholas Mak, Director, Consultancy and Research, Knight Frank, said, “I think that if any residential development were to be redeveloped on that site, and if it’s priced reasonably, demand would be quite strong.”

But they do not expect the re-development to have a major impact on retail space and shop rentals along Orchard Road.

Mr Mak said, “In about 12 months or so, we’re going to see some new developments coming up on Orchard Road. So, if a major retail mall were to temporarily be taken offline, I think that vacuum could be filled by some of these new malls.”

Channel NewsAsia understands that re-development is likely to start in the second half of next year. - CNA/ms

Source : Channel NewsAsia - 12 May 2008