3 Strata-titled Commercial Units Portfolio in CBD launched for sale via EOI

The 3 Strata-titled Commercial Units Portfolio can also be purchased individually

3 Strata-titled Commercial Units Portfolio
image: Knight Frank Singapore

Knight Frank Singapore has been exclusively appointed to offer a portfolio of 3 strata commercial units located within the Central Business District (CBD), for sale via Expression of Interest (EOI).

The 3 Strata-titled Commercial Units Portfolio in GB Building, can be purchased individually or as a portfolio.

Both locals and foreigners are eligible to purchase the assets, which are zoned for commercial use. There will be no Additional Buyer’s Stamp Duty or Seller’s Stamp Duty imposed on the purchase.

Located at 143 Cecil Street, GB Building is a 99-year leasehold, 26-storey office development with a 3-level basement car park that can accommodate 105 vehicles. It is situated at the junction of Cecil Street and McCallum Street, and accessible via a fully sheltered walkway from the nearby Tanjong Pagar MRT station. The Telok Ayer MRT station and the upcoming Shenton Way MRT station are also within a stone’s throw away from the development.

The 3 Strata-titled Commercial Units Portfolio for sale include the retail podium spanning across the entire levels of 1 and 2, and full-floor office units on Level 3 and 8, with strata areas ranging from 5,425 sq ft to 13,067 sq ft. The retail podium at Level 1 and 2 is available for sale with vacant possession, while the office at Level 3 and Level 8 are for sale with existing tenancies. The total strata area for the units is 31,086 sq ft.

GB Building also falls within the Central Business District Incentive Scheme, which encourages the conversion of existing, older, office developments into mixed-use developments that will help to rejuvenate the CBD. The Urban Redevelopment Authority (URA) has provisions for increases in development intensity, should there be plans for redevelopment with the stipulated change of land use. This provides the new purchaser a chance to capitalize on the untapped plot ratio via a collective sale exercise with the other owners.

Mr Ian Loh, Head of Capital Markets (Land & Building, Collective & Strata Sales), Knight Frank Singapore, shares, “Strata commercial units, particularly in District 1, are highly sought after by investors, as they are rarely available and tightly held. The three units in GB Building represents approximately 22% of the total strata area and 21% of the total shares of the development. This is a considerably large stake in the development, and such capacity will come into play during a collective sale exercise. We expect strong interests from investors looking to have a stake in the CBD commercial market, where most buildings are usually wholly-held by conglomerates.”

The EOI for the 3 Strata-titled Commercial Units Portfolio will close on Wednesday, 28 April 2021, at 3pm.

Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “the 3 Strata-titled Commercial Units Portfolio may be a good buy because office rents recovery is expected in the second half of 2021, resulting in an overall positive rental growth for the whole of 2021.”

An earlier research by CBRE said that the office rents recovery will come on the back of Ministry of Trade and Industry’s projection that the Singapore economy will grow by 4% to 6% in 2021. Nonetheless, office demand is expected to remain relatively subdued in 1H 2021, as firms will still remain cautious in the wake of the COVID-19 pandemic. Should economic activity and business sentiment recover after the administration of the vaccine by Q3 2021, the office market is well poised to benefit from the gains in employment.

Five new projects are estimated to complete in 2021, which will add another 1.23 million square feet to the entire office stock. Out of these five, there is only one Grade A office development – CapitaSpring, which will add another 0.65 million square feet of office stock to the Grade A (Core CBD) market.

Mr Desmond Sim, Head of Research, Singapore and Southeast Asia, CBRE, says, “Leasing activity is improving, as we understand that there are currently more ongoing negotiations for CapitaSpring which is slated to complete next year. The initial office supply pressure for 2022 has been dissipated due to construction delays, but which augured well for the office market as it provided more time for pre-leasing activities. The future supply that will spread over a longer time horizon allows demand and supply dynamics to recalibrate.”

Although there is a limited supply of new Grade A developments in the pipeline, CBRE Research expects that Grade A (Core CBD) occupancy will face further downward pressure in the early stages of 2021.

Chinese technology and non-bank financial services firms to fuel office rents recovery in 2021
Given Singapore’s political-neutral position and its introduction of new initiatives in terms of policy and tax structures, more Chinese technology firms are displaying strong appetite for expansion within the city.

Office demand in 2021 will also be fueled by non-bank financial services firms such as investment managers and hedge funds. To enforce Singapore’s position as a hub for investment funds, the Monetary Authority of Singapore launched the Variable Capital Companies framework in January 2020.

Office rents recovery on the cards

Through 2020, there was an increase in vacant stock as firms reduced their footprint upon renewal or relocation. A diverse range of industries, namely financial, insurance and technology, also contributed to the looming secondary space in the market.

This resulted in an increase in islandwide office vacancy from 4.5% in Q4 2019 to 6.0% in Q4 2020. With emerging vacancy in the market, there was downward pressure on Grade A (Core CBD) office rents. In Q4 2020, Grade A (Core CBD) office rents corrected for its fourth consecutive quarter, declining at 2.8% q-o-q to S$10.40 per square foot per month. This represented a full year decline of 10.0% in Grade A (Core CBD) office rents, which reversed the rental growth of 6.9% in 2019.

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