CDL unit buys Delfi Orchard in $439m collective sale

SINGAPORE – Delfi Orchard, a 40-year-old strata-titled building which is majority-held by City Developments (CDL), has been sold via collective sale to its unit CDL Draco for $439 million.

The sale price, which works out to $3,346 per sq ft per plot ratio (psf ppr), is based on the existing gross floor area (GFA) of 131,186 sq ft, said marketing agent Savills Singapore.

The prime 11-storey freehold commercial building comprises 150 strata-titled units – 127 shops and 23 apartments – of which 126 are owned by CDL. Savills said the tenants and owners of the commercial and residential units will have to move out six months after the legal completion of the sale.

The property developer said it may explore the potential to tap the Urban Redevelopment Authority’s (URA) Strategic Development Incentive (SDI) scheme in the near future.

Under the SDI scheme, developers can increase their GFA if they have proposals that transform the precinct, or partner with owners of neighbouring properties to submit comprehensive redevelopment proposals, among other conditions.

Mr Sherman Kwek, CDL’s group chief executive officer, said: “Having owned 84 per cent of the units already, this acquisition allows CDL to potentially unlock the full potential of this prime freehold asset.

“With several redevelopments anchoring the planned transformation for this part of the Orchard Road precinct, this is an exciting opportunity for us to participate in the rejuvenation efforts.”

Located at 402 Orchard Road, it sits on a 20,264 sq ft freehold site zoned for commercial use, with height control of up to 20 storeys.

The sale of Delfi Orchard is the third major collective sale in the Orchard Road corridor brokered by Savills, following the earlier successful collective sales of Tanglin Shopping Centre and Ming Arcade, said Mr Jeremy Lake, Savills Singapore’s managing director of investment sales and capital markets.

The last collective sale in the Orchard area was that of Ming Arcade, which

sold for $172 million in December 2022,

or $3,125 psf ppr, while Tanglin Shopping Centre was

sold in February 2022 for $868 million,

or $2,769 psf ppr.

The Delfi site allows developers the flexibility of multiple development options, ranging from office, luxury retail, residential to hotel, Mr Lake added.

In September 2023, a deal was struck to sell Far East Shopping Centre to Chinese tycoon Du Shuanghua for about $910 million, or $3,421 psf ppr. However, the deal crumbled when the buyer’s redevelopment proposal, submitted under the SDI scheme, was rejected.

Just off Orchard Road, Scotts Square mall, which sits between the Grand Hyatt Singapore and Tangs, was

put up for sale at $450 million in January 2024

but has not yet found a buyer.

Ms Catherine He, Colliers Singapore’s head of research, said that if like Delfi, Scotts Square is also sold, this may boost the attractiveness of Far East Shopping Centre, as these three older projects “could form another zone with higher-end offerings supported by its own residential and office catchment”.

Furthermore, a healthy recovery in retail rents in the URA central region (which includes Orchard) as at the first quarter of 2024, coupled with the recovery in tourism, and an anticipated retreat in interest rates should help push the sale of Far East Shopping Centre across the finish line eventually, she added.

Delfi Orchard is a stone’s throw from Ardmore Park/Nassim Park, and near the Orchard Road shopping belt, medical establishments, private clubs, hotels and the Singapore Botanic Gardens.

CDL has a strong track record in the vicinity, and its portfolio includes Orchard Hotel and Claymore Connect, and Palais Renaissance, which is across the street from Delfi Orchard. It also has stakes in the nearby St Regis Singapore hotel, The Singapore Edition hotel and Boulevard 88 condo in Cuscaden Road.

The law firm of Rajah & Tann acted for the owners of Delfi Orchard in the collective sale.