Forward Sale Eyed For Redeveloped PIL Building
SINGAPORE –LaSalle Investment Management and TE Capital Partners, the joint venture (JV) that completed the S$323.8 million acquisition of PIL Building earlier this year, are mulling a forward sale of the commercial property after they completed its redevelopment, reported The Business Times on Thursday morning (8 September, SGT).
According to market chatter, the joint venture is targeting to sell the asset for S$4,000 psf based on the redeveloped project’s overall net lettable area (NLA) of slightly more than 190,000 sq ft, which would work out to over S$760 million.
The idea is to divest the entire redeveloped property rather than individual strata-titled units, even though the Urban Redevelopment Authority’s (URA) granted written permission in July that stated that the project may be strata subdivided.
The existing 17-storey PIL Building (73 metres) is expected to be torn down by Q2 2023. The new office project to be constructed on the site will be called Solitaire On Cecil. The tower will have a height of 127 metres and will have 20 floors, of which 15 levels are intended for office space.
Its office floor plates will measure between 11,000 sq ft and 13,000 sq ft. All of its office levels will have a floor-to-floor height of 4.9 metres (16 feet), exceeding the usual 3 metres to 3.5 metres for newer office buildings within the central business district (CBD) of Singapore.
Designed by DP Architects, Solitaire On Cecil’s 1st floor will contain some F&B outlets, and there will be 25 car parking lots in its two basement levels. The office project will also feature end-of-trip showering and changing facilities on Level 3, as well as parking spaces that can fit 120 bicycles.
On level 4, office tenants can find a gym and other facilities, including a sky garden. The commercial property will also contain a rooftop sky lounge for collaborative use.
Solitaire On Cecil has an approved gross floor area (GFA) of 218,796.50 sq ft, far greater than PIL Building’s existing 147,315 sq ft. The permitted GFA reflects the 11.2 plot ratio stipulated for the commercial-zoned site. The asset will stand on 3 land plots collectively measuring 19,535 sq ft. The biggest site is 14,985 sq ft and is freehold. While the two smaller land plots are 99-year leasehold, the government has consented to upgrade them into freehold.
The property has a total land area of 19,535 sq ft comprising 3 plots, the biggest of which is about 14,985 sq ft and freehold. It is flanked by 2 smaller plots with 99-year leasehold land tenures that started from May 1977; the authorities have given the nod to upgrade the land tenure of these 2 plots to freehold.
Regarding the rumoured selling price, Savills Singapore’s Executive Director Of Research Alan Cheong commented that it could be palatable to some investors.
“In a period of great angst and uncertainty on multiple fronts, yields may not matter that much to some investors who may wish to have peace of mind by switching their asset holdings into freehold real estate in a safe-haven.”
In terms of psf of existing NLA, the most expensive price commanded by an entire office tower here is S$3,721 psf. This is for the S$500 million disposal of the freehold Robinson Point in 2021. However, market observers suggested that the record office price probably considered the commercial property’s redevelopment potential.
Market watchers shared that a more recent example of a reasonably large office space with similar tenure in Singapore’s CBD, is the sale of the entire 8th floor at Samsung Hub for S$4,050 psf. As the asset measures around 13,111 sq ft, the overall price was almost S$53.1 million. This remains as the highest psf price for an entire office floor in the 999-year leasehold building, mirroring the rate for the entire 9th floor at the same development in 2021.