THE 14th floor of Samsung Hub along Church Street has been sold at slightly over $39.72 million or $3,030 per square foot based on its 13,110 sq ft strata area.
Word on the street is that Arch Capital Management, aHong Kong-based private equity real estate firm with links to Ayala Group of the Philippines, is selling the whole office floor - comprising four strata units - to a mainland Chinese company. The floor is leased until year-end to a law firm.
This means Arch Capital will be exiting the 999-year leasehold office tower, having sold all its space on the 13th floor via four smaller strata units adding up to 13,110 sq ft between late 2012 and early 2013 at prices ranging from $2,920 psf to $3,150 psf.
Arch bought the two floors from Ho Bee for $2,550 psf in 2011.
Last year, all six strata units on the 17th floor were transacted - at between $3,126 psf and $3,500 psf; the top end of this price range was for an 883 sq ft unit. The average price achieved for the floor (totalling 13,132 sq ft) worked out to $3,210 psf.
That space was sold by a partnership between Buxani Group and a group of investors advised by Seychelles-based Capital Management Group.
The same partnership is understood to be in discussion to sell the entire 18th floor to one buyer. The 13,132 sq ft space comprises six strata units leased to three tenants with lease expiries between late 2015 and early 2016.
As for the 14th floor, market talk is that there were indications of higher psf prices being offered for individual units on that floor though Arch preferred to divest all the four units to a single buyer - which makes sense as the entire space is leased to a single tenant.
"Buyers with $39 million to spend will pay a lower psf rate than the guy buying a quarter of a floor," said the head of investment sales at a leading property consulting group. "To compare apples with apples, the trend line is still intact. On a whole-floor basis, office prices at Samsung Hub are still trending up, albeit at a moderate pace."
The latest full-floor deal - $3,030 psf for the 14th floor - is higher than the $3,000 psf achieved for the previous full-floor sale in the building, involving the 16th floor in late 2012, especially taking into account that the latest transaction involves a lower office floor (which typically commands a lower psf rate) and an inauspicious-sounding number in Chinese. The 16th floor transaction was in turn higher than the $2,800 psf that the entire 20th floor fetched in 2011.
Had the 14th floor just transacted been vacant, a new benchmark may have been achieved (on full-floor basis) at Samsung Hub, suggest property agents.
Market watchers say the most aggressive buyers generally for completed strata office space today are those who want to use the premises in the near future. Such space tends to be more marketable as it appeals to this buyer profile.
An office floor that has a long-term tenancy may get sidelined as it would draw pure investors who tend to be less aggressive - given the higher entry price today and worries about interest rate hikes.
Office prices in Samsung Hub - on a whole-floor basis - have climbed from $2,125 psf on the lower levels (Levels 8, 9, 10 and 11) in 2010 to slightly above $3,000 psf currently as seen in the 14th floor transaction.
The Grade A office tower is regarded as one of the best quality, strata office plays in the prime Raffles Place financial district, especially given its rare 999-year leasehold tenure.
Other completed quality CBD office buildings popular among strata investors include the 99-year leasehold Suntec City and Springleaf Tower. Upper floors in both developments command sea views.
At newer developments under construction such as the 99-year leasehold SBF Center along Robinson Road/Cecil Street, office units are said to have changed hands recently for as high as $3,550 psf for both part floors and full floors on upper levels of the 31-storey project.
Source: Business Times, 10 Apr 2014