GSH bullish about sale of office units in Raffles Place


AS COMPETITION for buyers in the strata-titled office market heats up, developer GSH Corporation believes its first property development here will hold its own.

GSH, wholly owned by Singapore tycoon and "popiah king" Sam Goi, is today selling office units at its GSH Plaza to buyers who have expressed interest.

GSH chief executive Gilbert Ee said one reason for the firm's confidence in the Raffles Place building is the fundamental real estate investment tenet: location.

"There's a shortage of new strata-titled space within Raffles Place. And of the ones that are coming up in the Central Business District (CBD), other than GSH Plaza, the rest are in the Robinson Road and Cecil Street areas, which are different."

Raffles Place, the heart of the CBD, is home to about 40 office buildings, of which only eight are strata-titled, estimated property firm JLL. Vacancy rates there are lower than in the rest of the CBD, at 2.7 per cent, noted JLL international director Karamjit Singh.

That compares with the overall vacancy rate of 5.9 per cent for office space in Marina Bay, Shenton Way, the vicinity of Suntec City and Raffles Place. Most of the buildings around Raffles Place - Prudential Tower, Capital Square and Republic Plaza, to name a few - are 98 per cent to 100 per cent filled, said Mr Singh.

But that location comes at a premium. The 259-unit GSH Plaza has 100 units available for sale now, ranging from 480 sq ft to 1,700 sq ft, with prices from $2,850 per sq ft (psf) to $3,500 psf. It has about 73 years left on its lease.

The 28-storey building is on leasehold terms, but much value has been added, Mr Ee said.

The building was known as Equity Plaza before it was bought from Keppel Land and Alpha Investment Partners for $550 million - or $2,181 psf - last year. It underwent a complete refurbishment, getting new lifts, marble floors and a glass-curtain facade, adding $400 psf of value to its sellable area of 260,000 sq ft.

Mr Ee said that despite an upcoming supply of new units from office developments such as Crown@Robinson and Oxley Tower - both in Robinson Road - landlords will be able to fetch rents of $10 psf to $15 psf a month.

That could translate to a return on investment of 9 per cent to 10 per cent, with bank financing of up to 80 per cent of the property's price, he added.

"The private practices (such as the law firms) have been in this area for a while. They started renting when prices were $5 psf to $6 psf, and these are increasing each year. Many were squeezed out because nothing was available even when they wanted to buy."

The bulk of the interest has so far come from high net worth clients and bankers representing them - some of whom have inquired to buy whole floors.

"As with most leasehold properties, you get a higher return on investment because your acquisition price is lower," Mr Ee said.

There are no plans to sell the 21 retail units on the first two levels of the building.

GSH, which has also developed properties in Kota Kinabalu and Kuala Lumpur, will set up its headquarters in the building.

Source: Straits Times, 8 Apr 2015