ALMOST 18 per cent of The Arcade at Raffles Place comprising four floors have been put up for sale through an expression of interest exercise, and the indicative price range is between $80 million and $90 million.
Rare opportunity: Based on the indicative price of $80 million-$90 million, the unit price for the 32,120 sq ft of space is between $2,500-$2,800 psf Based on the indicative price, the unit price for the 32,120 sq ft of space is between $2,500-$2,800 psf.
CB Richard Ellis (CBRE) and Jones Lang LaSalle are advising the owners jointly on the divestment. CBRE added that the owners are Singaporean.
CBRE director (Investment Properties) Charles Hoon also said that the four strata-titled floors for sale represent a rare opportunity to own commercial space at Raffles Place because most of the office buildings in the area have single owners.
Mr Hoon did say that the original developer of The Arcade still owns about 30 per cent of the building so there is a potential to redevelop the site through a collective sale especially as the existing built-up gross floor plot reflects a plot ratio of about 8 but can be maximised to about 14.
The Arcade is a 20-storey mixed commercial and retail building comprising an office tower and a three-storey retail podium with a total net lettable area of about 118,317 sq ft.
The property is held on a mixture of 999-year and 99-year leasehold interests.
The current yield is about 2 per cent but Mr Hoon said that with leases expiring next year, rental appreciation can be expected.
The lease profile shows that 60 per cent of the current leases will expire in 2008 and the yield can be expected to increase to around 5 per cent.
Existing leases are tenanted out at around $9.20 psf.
Gains from capital appreciation are likely to be higher.
In Q3 2007, CBRE noted that average capital value for prime offices was estimated at $2,900 psf, reflecting an increase of 16 per cent quarter-on-quarter (QOQ) and 114.8 per cent year-on-year, while prime office yields were at 4.32 per cent, up slightly from 4.23 per cent QOQ.
The office sector is still seeing buoyant investment sales. In October, 12 floors at Springleaf Tower (near Tanjong Pagar MRT station) were sold for $225 million representing a unit price of around $2,000 psf.
In August, the entire Chevron House at Raffles Place was sold for $730 million or a record $2,780 psf of net lettable area.
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