The sleepy corner of Dhoby Ghaut that housed Park Mall is getting a new lease of life.
Singapore-listed developer SingHaiyi Group yesterday unveiled plans for a new 10-storey building, which is now under construction at 9 Penang Road, near Orchard Road.
The mixed-use project will have two wings comprising eight levels of office space, with a total of about 352,000 sq ft of net lettable area, and a 15,000 sq ft floor for retail.
There will be cycle paths around the building as well as bicycle parking facilities and shower rooms.
SingHaiyi yesterday said the project will cost about $800 million. The lease for the site has also been extended to 99 years.
The former Park Mall was the go-to place for shoppers looking for furniture after it changed its focus from fashion in 1995.
It was sold by Suntec Real Estate Investment Trust (Reit) in June 2015 for $411.8 million.
The trust still holds a 30 per cent stake in the building.
Mr Desmond Sim, CBRE research head for Singapore and South-east Asia, said while office demand is facing challenging times, Orchard Road has its own sources of demand, and relatively stable and low vacancy rates.
He added: "The new building will be a breath of fresh air for Orchard Road as there has been no new supply in this sub-market for a period of time.
"There might be some 'musical chairs' as tenants in the area move to quality."
Its location, he noted, could be a "plus or minus - it is not right in the middle of the action but it is well connected to the MRT".
Mr Sim said it was too early to project rental yields but added that office rents in Orchard Road are about $6.70 per sq ft a month.
Savills Singapore research head Alan Cheong said SingHaiyi, being a Chinese company, could attract mainland Internet companies to move into the building.
"I won't be surprised if Internet firms choose to relocate to Orchard as they want a campus-like atmosphere but have not reached a critical mass," he added.
Mr Terence Ang, a corporate advisory partner who works in Dhoby Ghaut, said the mall would add retail and dining options to the area where Plaza Singapura is also sited. "Hopefully, it will have a nice restaurant or two where I can bring clients," he added.