Seven office projects for collective sale: Report

The outlook for the office investment market has turned less positive but even so, at least seven office developments were put up for sale on an en-bloc basis in the last quarter, a new report says.

The latest offerings followed the sale of Thong Sia Building in Orchard Road in July, the report by Chestertons noted.

The 26-storey freehold development with seven levels of commercial space and a residential block went to Sin Capital Group for $380 million, or $2,431 per sq ft (psf) on gross floor area - the only collective sale so far this year, noted Chestertons' head of research Elaine Chow.

The seven office projects on offer include Asia Square Towers 1 and 2 in Marina Bay; 137 and 139 Cecil Street; Robinson 77 and the CPF Building, and The Prospex at Bugis.

BlackRock's Asia Square Tower 1 and potentially Tower 2 could fetch $7 billion in total, or $3,200 psf on net lettable area.

The CPF Building is "widely expected" to go for $450 million. Further down Robinson Road, the former SIA Building, or Robinson 77, could fetch $649 million, or $2,200 psf on net lettable area, Ms Chow noted.

The Prospex, a nine-storey commercial building, was recently completed and won strata subdivision approval but Hong Kong owner Pamfleet has had a change of mind.

Strata office sales volumes slumped 47.4 per cent from the second quarter to 41, including 25 resale units and three sub sales.

While the median price for new sale units rose 8.6 per cent to $2,703 psf, that for resale units fell 3.5 per cent to $1,882 psf.

"CBD office rents are already softening due to a slowdown in the local economy...Rents are expected to come under immense pressure with potentially 5.1 million sq ft of office space completing next year," said Ms Chow.

"It is unlikely capital values would remain at current elevated levels as rents soften and yields become compressed."

Rennie Whang

A version of this article appeared in the print edition of The Straits Times on October 08, 2015, with the headline 'Seven office projects for collective sale: Report'. Print Edition | Subscribe