THE sleepy western end of the Orchard Road retail district has plenty of untapped redevelopment potential, and investors should keep an eye on firms that own these choice sites, OCBC Investment Research said yesterday.
The area stretching from Far East Shopping Centre to Tanglin Mall stands to gain from possible redevelopment plus the upcoming Orchard Boulevard MRT station, said analyst Eli Lee in a report.
Its value could also get a boost from an expected shortage of retail space in the main Orchard Road shopping district over the next few years.
The winners in all this could be the listed landlords whose "crown jewels" are in the area - Hotel Properties Limited (HPL), Wheelock Properties, Hong Fok and Bonvests, Mr Lee said.
HPL shares shot up 9.5 per cent or 38 cents to $4.40 yesterday following the release of the OCBC report.
Wheelock climbed 7 per cent or 12.5 cents to $1.91, Hong Fok was up 2.3 per cent or 2.5 cents to $1.10 and Bonvests added 1.4 per cent or two cents to $1.44.
The part of the shopping belt which Mr Lee calls "West Orchard" typically attracts fewer visitors than the eastern end, including malls such as Ion Orchard and those near Somerset MRT station.
The properties in west Orchard also tend to be older and suffer from "less access to the MRT grid via underground pedestrian links", he noted.
However, this could change in a few years.
Mr Lee pointed out that there was a "meaningful confluence" of factors that would support the area's revitalisation.
One factor is that developers have been given incentives for redevelopment under the latest Master Plan, particularly for large plots of land.
Another is better accessibility. The Government has planned comprehensive underground links from the key Orchard MRT station to the area, he noted.
The Orchard Boulevard MRT station along the upcoming Thomson Line is slated to be built near Camden Medical Centre. This could bring more foot traffic to the area once it is completed by the end of 2021.
This may encourage developers such as HPL to consider redeveloping or expanding their assets, possibly to coincide with the completion of the station, noted Mr Lee.
HPL owns four adjoining properties in west Orchard: Forum The Shopping Mall, the Hilton Singapore and Four Seasons hotels as well as HPL House.
These sit on a total of around 212,000 sq ft of land, which Mr Lee said could be redeveloped into a "mega mixed project" bigger than Ion Orchard.
If HPL embarked on such a project, it could yield as much as $1.25 billion in surplus net present value for the company, he said.
It may also give a boost to landlords nearby. "Any significant redevelopment or asset enhancements could also play a role in revitalising the west Orchard area."
Wheelock owns Wheelock Place; Hong Fok owns International Building, which is next to Shaw House; and Bonvests owns Liat Towers.