Foreign Companies Still Keen On Commercial Property In CBD

Nov 10, 2007

This year is a year which witnessed a lot of buying activities of commercial buildings in the Central Business District (CBD) by foreign companies.

Goldman Sachs real estate fund

In August, a Goldman Sachs real estate fund acquired Chevron House at Raffles Place for $730 million or a record $2,780 psf of NLA. Chevron House is a leasehold 99-year project.

The same group is also believed to be laying its hands on the next door Hitachi Tower for about $3,000 psf. The 37-storey office tower facing Collyer Quay is on a 999-year leasehold tenure.

In November 2006, it paid $690 million for two buildings that house the headquarters of DBS Group Holdings.

Macquarie Global Property Advisors (MGPA)

The other major overseas investor who has been busy acquiring commercial property here is Macquarie Global Property Advisors (MGPA). In September, it paid $2.02 billion or $1,409 psf ppr for a mixed development site within the Marina Bay area just behind One Shenton in a Government Land Sale Programme.

The winning bid is a record for a 99-year leasehold commercial site slated primarily for office development.

Earlier 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 the neighbouring Springleaf Tower for $225 million to a unit of German pension fund manager SEB, making a neat profit as it had bought the floors for only $134 million 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 2006.

CLSA Capital Partners

CLSA Capital Partners, a global private-equity investor, has equity of $430 million in its Asian operation and can borrow three times that to fund purchases. Unlike local Real Estate Investment Trusts (REITs) which are restricted by MAS’ strict borrowing rules (maximum 60% of asset value) and the time it takes to get shareholder approval to raise funds.

In June 2006, CLSA Capital Partners’ subsidiary TSO Investment bought SIA Building at Robinson Road for around $260 million.

In April 2007, it resold the national airline’s former Headquarters to a German pension fund manager SEB for around $525 million or about $1,780 psf of net lettable area.

This is a new record price for an office building in Raffles Place and Shenton Way areas.

Built in 1997, SIA Building is 35-storey tall and has a total net lettable area of about 295,000 sq ft. It comprises 31 levels of office space, some retail space and parking facilities. It has a leasehold status and still has a remaining lease of 86 years.