Spring S'pore Bt Merah Building Up For Sale

Source : The Business Times, July 2, 2008

COMMERCIAL development Spring Singapore at 2 Bukit Merah Central will be put up for sale today, with market watchers expecting it to fetch $150 million to $180 million.

The development comprises a 22-storey tower block and a six-storey podium block and stands on an 88,295-sq-ft site with a remaining lease of 75 years.

The Urban Redevelopment Authority has slated the site for commercial use.

Currently close to full occupancy, the development has a total gross floor area (GFA) of 355,153 sq ft and a lettable area of around 198,744 sq ft.

Enterprise development agency Spring Singapore owns the building and occupies about 50 per cent of office space, said a Spring spokesperson. The remaining space is rented out to private sector firms such as training companies.

Spring Singapore will lease back about 50 per cent of the building's office space after the sale.

Property consultant Colliers International is launching the sale via an expression of interest exercise.

Its executive director of investment sales Ho Eng Joo said: 'The property is currently yielding a net lettable area of close to 60 per cent of the GFA. The successful buyer could reconfigure the existing floor layout to maximise lettable area.'

The buyer could convert the podium block to retail use to maximise investment return, he added.

'The existing office supply crunch - coupled with an upward spiral in office rents - has resulted in an increasing number of tenants seeking alternative commercial space in fringe CBD areas . . . We expect to see keen interest for the subject property.'

Cushman & Wakefield's managing director Donald Han also noted that investors are capitalising on spillover demand for office space in suburban areas.

According to Colliers International's Mr Ho, average rents in the Spring Singapore building range from $3 to $3.50 per sq ft (psf) per month, and could increase to $4 to $5 psf per month upon lease renewal.

But Chesterton International's head of research and consultancy Colin Tan believes market sentiment has cooled and office rents could contract significantly in 2008 and 2009.

He believes that the selling price for the Spring Singapore building could be at the lower end of $150 million-$180 million, but will depend on what leaseback rental arrangements are.

Savills Singapore's director of marketing and business development Ku Swee Yong notes that the development may fetch around $160 million.

Interested parties have until July 29 to submit offers to Colliers International.