A PRIME albeit small commercial site in Raffles Place, The Arcade, on a site of about 21,900 sq ft, could be put up for collective sale soon.
Word on the street is that the price tag for the 20-storey office-and-retail building is around $3,000 per square foot per plot ratio (psf ppr), inclusive of development charges of $100 million-plus. This would suggest The Arcade's owners stand to pocket around $800 million.
Property group City Developments owns nearly 47,500 sq ft of space in the building, according to its annual report. This translates to slightly more than 30 per cent of the building's total strata area of about 157,300 sq ft and 30-plus per cent of share value, making it the biggest owner.
BT understands that owners controlling at least 80 per cent of share value and strata area in the property have consented to The Arcade's collective sale, but verification of one or two signatures is pending. Once this is settled, a tender for the collective sale can be launched.
The Arcade is on a site with land tenure of 999 years starting April 1826, but some owners have only 99-year leasehold interest (starting October 1979) on their units. CDL, which holds the reversionary interest on the 99-year leasehold title of such units, has agreed to sign off for The Arcade to be sold on 999-year tenure for the 99-year units whose owners agree to the collective sale.
Completed 32 years ago, The Arcade has significant redevelopment potential. Its existing gross floor area is said to reflect a plot ratio of about 8.0 - significantly lower than the maximum 13.86 allowed for the site under Master Plan 2008, inclusive of bonus plot ratio for the site's proximity to Raffles Place MRT Station. The site is zoned for commercial use.
While The Arcade is a rare 999 year-leasehold commercial site in the Raffles Place financial district available for sale, one drawback is the site's small area and narrow configuration.
However, if Singapore Land, the owner of Clifford Centre next door, were to buy The Arcade, it could potentially amalgamate the two sites to form a more substantial site for redevelopment.
Colliers International is understood to be the marketing agent for The Arcade's collective sale.
The Arcade's collective sale may also draw potential investors who may not be looking at immediate redevelopment of the property. There is potential to trade the existing strata retail units, which are mostly tiny and can hence fetch high prices of several thousand dollars per square foot.
The first three levels of the 20-storey building house retail units and offices start from the fifth level. The Arcade has 51 basement car park lots.
Source: Business Times, 12 Nov 2013