Sultan Plaza makes second bid for $360m en bloc sale as commercial property market heats up

The 45-year-old property was first put up for collective sale with a reserve price of $380 million in 2019. PHOTO: TEAKHWA REAL ESTATE

SINGAPORE -  Commercial building Sultan Plaza is trying its luck at a $360 million collective sale for a second time.

The 45-year-old property will be relaunched on May 31 at the same reserve price, after a previous tender closed on March 3 with no buyers. Its first en bloc attempt in 2019 was at $380 million.

Marketing agent Teakhwa Real Estate is optimistic: “With very strong sales achieved at recent new project launches, we are seeing keener developer interest to replenish land banks.” 

Located at 100 Jalan Sultan, the 52,471 square foot commercial-zoned site comprises 211 commercial units and 33 offices, totalling 244 strata lots.

If the en bloc sale is successful, shop owners will each stand to get between $162,900 and $46.3 million, while owners of offices will receive between $619,800 and $2.05 million, Mr Sieow Teak Hwa, managing director of Teakhwa Real Estate told The Straits Times. 

In-principle approval has been given by the Singapore Land Authority for a potential sale of remnant state land of about 10,968 sq ft adjoining the Sultan Plaza site. 

With the potential purchase, the plot can be expanded to about 63,439.8 sq ft and redeveloped to a gross floor area (GFA) of 317,198.9 sq ft.

The Sultan Plaza site can be redeveloped for mixed use, with up to 40 per cent floor area for commercial use and the remaining 60 per cent for residential units, according to a URA outline planning permission advisory.

As a mixed-use project, the price will work out to a land rate of $1,548.7 per square foot per plot ratio (psf ppr) including estimated costs to buy the state land, a 7 per cent bonus balcony gross floor area, differential premium and lease top up premium, Mr Sieow said.

Alternatively, the site can be redeveloped into a 700-key hotel with ancillary shopping and commercial space.

For a new hotel with 20 per cent commercial floor area, the land rate will work out to $1,629.4 psf ppr, including estimated costs to buy the state land, differential premium and lease top up premium, Mr Sieow said.

There is no additional buyer’s stamp duty payable for the commercial site, whose tender will close on June 28 at 3 pm.

Located near the Nicoll Highway and Lavender MRT stations, the site is also close to Marina Bay, Bugis Junction, Raffles Hotel, the F1 race circuit and Kampong Glam district. 

To date this year there have been three commercial en bloc deals totalling $1.62 billion in value compared with just one for the same period last year - that of Maxwell House, which sold for $276.8 million. For the whole of 2021, commercial en bloc deal value totalled $926.8 million.

The latest property cooling measures could also have shifted some investor demand to the commercial property market, Mr Wong Xian Yang, head of research at Cushman & Wakefield said.

Helping boost total commercial en bloc deal value this year were the mega sales of Golden Mile Complex and Tanglin Shopping Centre, for $700 million and $868 million respectively.

“These transactions helped boost market sentiment and we anticipate more projects to launch amid a tight commercial and residential market,” Mr Wong said.

Developers and investors remain confident in the mid- to long-term prospects of the Singapore property market due to the country’s stable economic outlook and a limited supply of prime commercial space, Mr Wong said. 

This is reflected in the recovery of the commercial rental market. 

Mr Wong noted that office rents in the central region rose 1.6 per cent in the first quarter this year from the previous three months, the second consecutive quarter of growth.

“While central region retail rents fell by 0.4 per cent in Q1 2022, we anticipate retail rents to bottom out and return to growth this year, given the re-opening of borders and relaxation of safe distancing measures,” he added. 

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