Atrium @ Orchard Could Fetch Over $1b: Analysts

Source : The Business Times, November 1, 2007

Govt expected to put property up for sale with fresh 99-year lease

SINGAPORE Land Authority is putting up The Atrium @ Orchard for sale, BT understands.

Atrium @ Orchard: With 359,000 sq ft of office space and 16,000 sq ft of retail space, it has tenants like HSBC, Barclays, MTV

Market watchers say the property is expected to fetch over $1 billion. They reckon the Orchard Road property, which will be sold with a fresh 99-year lease, could fetch up to $3,000 psf of net lettable area (NLA).

At $1 billion, the price works out to $2,667 psf based on the building's NLA of about 375,000 sq ft. 'I think it can fetch anything from $2,500 to $3,000 psf. The building has big-name tenants like Temasek, HSBC, Barclays and MTV, good-sized floor plates plus a prime location above Dhoby Ghaut MRT Station,' one market observer said.

BT understands that agents were recently approached by SLA to handle the sale of the property, and it is believed that CB Richard Ellis has been selected for the job.

Most of the space in the building, which has two blocks, of 10 storeys and six storeys, is for offices but there is also some retail space. The building was completed in 2002 when Singapore was still experiencing a glut in office space.

The Atrium @ Orchard was built by the Land Transport Authority as a model planning project integrating land use and town and transport planning, and handed to SLA for management on behalf of the state.

The development has about 359,000 sq ft of office space and 16,000 sq ft of retail space, according to an earlier report in The Straits Times.

Market watchers expect The Atrium to attract strong demand from overseas as well as local real estate investors. Interest in Singapore's office market, which is currently experiencing a supply crunch and soaring rents, has been sizzling.

In August, a Goldman Sachs real estate fund bought the leasehold Chevron House at Raffles Place for $730 million or a record $2,780 psf of NLA. Goldman Sachs group is also said to be finalising a deal to buy the next door Hitachi Tower, a 37-storey office tower on a 999-year leasehold site facing Collyer Quay, at about $3,000 psf.

Another major overseas investor in the local office market is Macquarie Global Property Advisors (MGPA). In September, it put in a record bid of $2.02 billion, or $1,409 psf of potential gross floor area, for a 99-year leasehold site slated for a mostly-office development behind the One Shenton project.

In March, an MGPA fund bought Temasek Tower in the Anson Road area for $1.04 billion or $1,550 psf of NLA. Later, MGPA sold 12 floors at Springleaf Tower, also in the Anson Road area, for $225 million to a unit of German pension fund manager SEB, making a neat profit as it had bought the floors for $134 million only in January.

SEB also bought SIA Building in April for about $526 million or $1,783 psf from TSO Investment, a fully-owned subsidiary of a property fund managed by CLSA Capital Partners. TSO had purchased the office block from Singapore Airlines in June last year for $343.88 million or about $1,165 psf.