It has plans for dramatic makeover with 100,000 sq ft of new retail space
THE Dhoby Ghaut shopping area will soon be jazzed up now that CapitaMall Trust (CMT) has bought a prime building there for $839.8 million - right next to Plaza Singapura, which it already owns.
A makeover is already under way at one end of Orchard Road with the upcoming Ion Orchard. Further along, Somerset Central is set to transform the Somerset area. Now, it is Dhoby Ghaut's turn.
SEAMLESS SHOPPING EXPERIENCE: This artist's impression shows how the planned integration of Plaza Singapura and The Atrium@Orchard will create 170m of prime retail frontage along Orchard Road. -- PHOTO: CAPITALANDCMT, the owner of retail malls such as Tampines Mall and Junction 8, said yesterday it had acquired The Atrium@Orchard from the Government.
The building, with two office towers of 10 and seven storeys, will boast an extra 100,000 sq ft in retail space, including the vast ground-level atrium and the area connecting it to Plaza Singapura. The Atrium is linked to the Dhoby Ghaut MRT interchange.
CMT's plans mean shoppers can look forward to large covered spaces, better links between The Atrium and Plaza Singapura, and more shops as CMT moves to integrate the two buildings.
CMT wants to attract overseas brands or local players such as watch shops or jewellery shops that might be keen to open flagship stores there given the extensive 170m prime frontage.
The chief executive of CapitaMall Trust Management, Mr Pua Seck Guan, said: 'We have strengthened our foothold in the downtown area of Orchard Road.' CMT already co-owns Raffles City with CapitaCommercial Trust.
The office development at The Atrium has about 20 tenants, including Temasek Holdings, Barclays Capital and MTV Asia. It was put up for sale by the Singapore Land Authority (SLA).
Already, government approval has been given to cover the state land or open space in front of Plaza Singapura.
Now that CMT is acquiring The Atrium, more ambitious plans are in the works, such as a fully sheltered link between the two buildings.
Also, the second floor of The Atrium will be connected to the corresponding floor of Plaza Singapura, Mr Pua said.
CMT is exploring if it would be possible to build more links between the higher floors or between the basements of the two buildings.
For retailers looking to sport an extra eye-catching presence, CMT plans to offer a striking design of duplex or double-storey stores.
With the integration, shoppers will also benefit from the direct links to the MRT station from The Atrium. Once the Circle Line is up and running, the Dhoby Ghaut station will offer commuters the convenience of three MRT lines.
In total, CMT's plans involve adding about 100,000 sq ft of retail space and taking away about 55,000 sq ft of office space. Mr Pua did not disclose the construction costs, but analysts said they could come to a few hundred dollars per sq ft (psf).
Once completed in about three years' time, the development will boast a total lettable area of about 900,000 sq ft, making it one of the largest developments on Orchard Road.
There are concerns that the added retail space will come onstream in uncertain economic times, but Mr Pua said 'there is no sign of a consumer slowdown at the malls'.
Some analysts also have concerns about the purchase because the current yield from the property is just 2.1 per cent, because of the low rentals inked by SLA.
However, Mr Pua said that with leases up for renewal, 'there is the potential to double the average office rental of the property by 2010'.
He is confident that increasing the ground floor space will improve the rentals. Units on the ground floor of Plaza Singapura command over $20 psf in rent.
CMT's purchase will be funded mostly by a $650 million convertible bond issue. Fully underwritten by Goldman Sachs, the issue will have a coupon rate of 1 per cent and a conversion premium of 20 per cent to 35 per cent.
CMT units were halted from trading yesterday afternoon before the news was announced.
Yesterday morning, they closed down 12 cents at $3.51.
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