Source : The Straits Times, Dec 13, 2007
Deal reaffirms confidence in Singapore's office market
APOLLO Centre on Havelock Road has been sold to a United States fund manager for $205million.
This higher-than-expected price comes as a relief to property watchers, who say it is a strong sign that foreign investors remain confident in the Singapore office market despite the US sub-prime mortgage crisis.
Marketing agent Knight Frank launched the seven-storey office building near Chinatown for sale in September, hoping to get at least $200 million.
The final sale price, paid by US real estate fund manager AEW Capital Management, works out to $1,378 per sq ft (psf) of net lettable area.
This is a 'fair price', considering that 'in today's market, prime offices about 10 minutes' walk from this building are going at close to $3,000 psf', said Mr Donald Han, the managing director of property consultancy Cushman & Wakefield.
At nearby Chinatown Point, office prices are already hovering around $1,300 psf, he added.
The sale of Apollo Centre is significant as it shows that foreign buyers are starting to look outside the prime Central Business District (CBD) for good deals, said Knight Frank's executive director, Mr Foo Suan Peng.
Most high-profile office sales in recent months have been of gleaming 'trophy' office buildings in the heart of the CBD.
As office prices skyrocket amid the space crunch, however, older properties on the CBD fringe are starting to look more attractive, even to foreigners who might not be familiar with Singapore's office market.
'Local buyers usually don't mind properties that are a bit out of the CBD, but a lot of overseas investors concentrate on prime Grade A buildings in the CBD,' said Mr Foo.
The 99-year leasehold Apollo Centre, which has 75 years left on its lease, is not a prime Grade A office building. It returns rents of about $8 psf, compared with about $18 psf for spanking new One George Street across the road, according to Mr Han.
Apollo Centre, however, has 'tremendous' potential in terms of increasing its lettable area, he said. When refurbished, it could command rents of at least $10 psf, he added.
The sale is 'certainly very good news now, when just one or two months ago, the market was trying to find its footing after the backlash from the US sub-prime crisis', he said.
'It's refreshing to know that foreigners, such as AEW, YTL and even Jackie Chan, have started to buy portfolios in Singapore.'
Mr Han was referring to Malaysia's YTL Corp, which last month bought Westwood Apartments on Orchard Boulevard for a record price, and Chan's recent purchase of 1 Neil Road.
AEW, which set up an office in Singapore in April, is also believed to have bought a row of conservation shophouses at Murray Terrace, off Maxwell Road. It is understood that the fund manager is looking to buy properties in Bangkok, Kuala Lumpur and Hong Kong.
Most of the tenants at Apollo Centre, within walking distance of the Subordinate Courts, are law firms.
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