UBS said to be mulling move to 9 Penang Rd


UBS is understood to be mulling a consolidation of its Singapore office footprint by relocating from One Raffles Quay and Suntec City into 9 Penang Road, which is coming up on the former Park Mall site opposite Dhoby Ghaut MRT Station.

This could potentially be one of the biggest office leasing deals on the island in recent years if the bank decides to lease the entire development in Penang Road comprising about 352,000 sq ft net lettable area of office space and 15,000 sq ft of retail space.

BT understands that a relocation from Singapore's financial district would be motivated not so much by financial savings but a desire by the bank to operate in a campus-style facility, occupying the whole building and even having its own canteen with its own chefs cooking for UBS staff.

Word in the market is that the commercial terms of a potential lease for 9 Penang Road have been more or less hammered out, but a deal is pending approval by the top brass at the world's biggest private bank in Switzerland.

Most office leasing observers were somewhat startled that UBS, which is also Asia's largest wealth management bank, is considering moving out of the financial district into Penang Road, which is not a typical headquarters location for a major bank. That said, 9 Penang Road is a stone's throw from the prime Orchard Road shopping belt and the location offers good connectivity: Dhoby Ghaut station is an interchange for the North-South, North East and Circle lines.

"Penang Road is not a traditional location for a major bank HQ but the project provides the scalability that UBS requires for consolidating its offices at one location," said a seasoned office leasing agent who is not involved with the potential leasing deal for 9 Penang Road. "In a very tight office market, the pool of buildings that have 350,000 sq ft office space to offer is very limited."

Currently UBS leases around 230,000 sq ft at One Raffles Quay's North Tower and about 90,000 sq ft at Suntec City.

The bank's lease at One Raffles Quay is said to be expiring around late next year and that at Suntec City in early 2021. This timing should dovetail with a potential move to 9 Penang Road. The 10-storey project is expected to be completed towards the end of this year and it would take some time for UBS to fit out a vacant building, say market watchers.

UBS is expected to retain its backroom operations at Hansapoint in Changi Business Park.

Analysts said that UBS could have negotiated for a gross effective monthly per square foot rental in the high single digit at 9 Penang Road.

If it were renew its existing leases, it may have to pay a rental in the low double-digit range at One Raffles Quay and high single digit at Suntec City.

Office leasing agents generally rate One Raffles Quay's specifications as being similar to 9 Penang Road despite One Raffles Quay being completed more than a decade ago - in 2006.

However, 9 Penang Road has the advantage of having bigger floor plates of 24,000 sq ft compared with 18,000 sq ft at the North Tower of One Raffles Quay.

Market watchers say UBS's potential decision to move out of the established Raffles Place and Marina Bay financial districts could signal an expansion of Singapore's Central Business District - thanks to better quality buildings springing up with appealing food and beverage offerings and MRT connectivity.

9 Penang Road is being developed by a 35:35:30 joint venture between SingHaiyi Group, Haiyi Holdings and Suntec Reit at a total development cost of about S$800 million, based on information on the website of Singapore-listed SingHaiyi Group.

Haiyi Holdings, a private vehicle of Gordon and Celine Tang, owns a majority stake in SingHaiyi.

The 9 Penang Road development will have eight floors of office space in two wings, from levels 3 to 10. The first floor is designated for retail space. Car parking will be in the basement and on the second floor.

The leasehold tenure for the site has been topped up to 99 years, expiring in December 2115.

Source: Business Times, 1 Apr 2019