[SINGAPORE] The owners of The Arcade, which include property developer City Developments, are looking to sell the 20-storey commercial development in Collyer Quay for $900 million.
The 999-year leasehold development has a maximum allowable gross floor area of 303,657 square feet, but the total existing strata area stands at 157,325 sq ft.
Marketing agent Colliers International said: "There is huge redevelopment potential for the site, as the existing plot ratio has not been fully maximised."
Under the 2008 Master Plan, the 21,909 sq ft site The Arcade now sits on is zoned for commercial use; its allowable plot ratio is 13.86, paving the way for a building up to 50 storeys high.
The Arcade, completed in 1981, comprises three levels of retail units and 16 levels of office space; its basement car park has 51 lots.
Tang Wei Leng, executive director of investment services at Colliers, said: "This is a great and rare investment opportunity for local and foreign investors, given the scarcity of strata- titled mixed developments available for sale."
She added that "good demand" is expected for both the retail and office units, if they are made available on a strata basis.
"Based on office transactions at Eon Shenton, Oxley Tower, Samsung Hub and SBF Centre, the office space at the new development is expected to be priced at above $3,500 per square foot (psf), and retail space, at above $12,000 psf.
"In fact, current asking prices for the retail units at The Arcade are already close to $10,000 psf, with the highest retail unit transaction recorded at $7,263 psf in January 2011."
Ms Tang suggested that a developer could turn it into a mixed-used development comprising four levels of retail shops, including a basement level that could possibly have direct access to Raffles Place MRT Station.
She added that car park lots could occupy levels four to six and offices/serviced apartments, from level seven up.
The sale will be done by tender, with the tender closing at 3pm on March 19.
Meanwhile, on the residential property front, a bulk sale through private treaty of 21 freehold apartment units is taking place at the 36-unit Newton Imperial, a high-end condominium on Newton Road.
The sale is being marketed by Savills.
Developer Great Newton Properties declined to reveal its price for these units, which were completed in 2011 and have a total of 38,201 sq ft of space.
Eleven units are 1,711 sq ft in size, while the other 10 are each 1,938 sq ft.
While no indicative price was provided, Steven Ming, deputy managing director and head of investment and sales at Savills, said: "Prime development sites are rarely available for sale and if they were, prices would generally be north of $1,500 to $2,000 per square foot per plot ratio (psf ppr).
"With an anticipated rise in construction costs, projects will break even above $2,300 psf. Hence, there is a compelling proposition now to invest in a prime residential project today, where prices are at below replacement-value levels."
Arun Sugumaran, senior manager of Savills Regional Capital Markets, said: "Despite the current cooling measures in place, such as the 15 per cent additional buyer's stamp duty (ABSD), gross yields of between 3 and 3.25 per cent are still achievable for this project as a result of its attractive price point.
"This gives investors something to think about as current commercial yields are at compressed levels, partly due to the buoyancy of the commercial market in recent times and a low-interest-rate environment.
"Furthermore, with capital values of commercial strata title properties at historic highs, Newton Imperial offers investors potentially higher capital appreciation in the medium to long term, and being strata-titled, the units can be traded readily."
Newton Imperial was Great Newton's first development in Singapore. The firm is said to be Indian-backed.
Source: Business Times, 23 Jan 2014