An Indonesian tycoon and philanthropist, Dr Tahir, has proposed buying the Straits Trading Building in Battery Road for $560 million - a sum that would set a new record for the per square foot price.
Singapore-listed investment holding firm MYP yesterday said that Dr Tahir had signed a letter of offer to acquire the 999-year leasehold Grade A office building in the heart of the Central Business District (CBD) from Sun Venture Group.
Sun Venture Group would bank a sizeable gain, given that it bought the 28-storey block from the Straits Trading Company for $450 million, or about $2,800 psf, in September 2014.
Dr Tahir, who goes by one name, is the founder of Indonesia's Mayapada Group. His son Jonathan Tahir is the executive chairman of MYP.
Analysts said the $560 million price works out to a record of about $3,520 psf based on the net lettable area of 158,897 sq ft. This would surpass the $3,125 psf for 71, Robinson Road, which was sold in 2008.
LONG INVESTMENT HORIZON
The Indonesian buyer, I believe, is probably buying it for the location and the long lease, and he is going in with a longer investment horizon.
KNIGHT FRANK'S RESEARCH HEAD ALICE TAN
I think the proposed acquisition is strategic - in that they are moving from the assets on the fringe of the financial district to the heart of the CBD. The Straits Trading Building will be a crown jewel in their commercial portfolio.
CHESTERTONS MANAGING DIRECTOR DONALD HAN
The offer comes amid softer demand from tenants and concerns over rising office supply putting pressure on rentals.
Chestertons managing director Donald Han noted: "There aren't many Raffles Place office buildings for sale. It is the price you have to pay if you want to stake a claim in the area."
Consultancy Knight Frank Singapore said while the psf price may be high, the overall investment sum at $560 million is still "palatable".
Knight Frank's research head Alice Tan added that in the CBD it is hard to get an office property of a long lease tenure and to be able to buy it on a single ownership basis.
MYP said in a stock exchange filing that 1 per cent of the purchase price of $560 million has been paid as a deposit, adding that the firm "is conducting due diligence with a view to signing a definitive agreement".
The deal is expected to be funded via a combination of "internal resources, bank borrowings and/or fund-raising in the capital markets".
Ms Tan said: "The Indonesian buyer, I believe, is probably buying it for the location and the long lease, and he is going in with a longer investment horizon."
MYP has two freehold commercial properties in Singapore - ABI Plaza in Keppel Road and MYP Plaza in Cecil Street.
Mr Han added: "I think the proposed acquisition is strategic - in that they are moving from the assets on the fringe of the financial district to the heart of the CBD. The Straits Trading Building will be a crown jewel in their commercial portfolio."