Singapore private home vacancy hits 10-year high

The vacancy rate for private homes in Singapore hit a near-10-year high of 7.9 per cent in the second quarter of this year, Urban Redevelopment Authority (URA) data released on Friday (24 July) showed, indicating there is an oversupply in the residential market.

The latest URA numbers showed there were 25,071 completed but unoccupied private homes as at Jun 30. This was higher than the 22,346 unoccupied units at the end of March and the largest number on record.

Vacant units comprise completed but unsold units as well as those that have been sold but are unoccupied. These include homes that are undergoing renovation.

Real estate company CBRE’s Head of Research for Singapore and Southeast Asia Desmond Sim said there may be a lag between the time a project is completed and when occupants move in.

“(But) the reality is that the market is still coping with an overwhelming number of completions,” he said.

CBRE expects vacancies in the private home market to inch up further in the current and next quarters, when a further 11,618 units are likely to be completed.

Market watchers have said that the latest curbs on foreign manpower will also drive up vacancies and put downward pressure on rents.

The Manpower Ministry recently said work pass holders will need to earn a minimum fixed monthly salary of S$5,000 to sponsor their spouse or children to stay here on the Dependant’s Pass, up from the current S$4,000.

The salary bar will also be higher for who want to bring their parents to Singapore on Long Term Visit Passes – it will be revised to S$10,000 a month, up from S$8,000.

There are 178,900 employment pass holders and 170,100 S Pass holders here as of December 2014, according to the ministry’s website.

Sales of 2 condos at Sentosa Cove raise hopes of rebound in June

TENTATIVE signs have emerged that prices at luxury enclave Sentosa Cove might be rebounding from the doldrums.

Two condominium units at The Oceanfront were sold in the $2,000 per sq ft range in April, newly disclosed figures have shown.

For the past two years, prices in the area have fallen way below the $2,000 psf mark, except for one unit sold at $4.32 million or $2,079 psf last October, according to SRX Property.

In January this year, prices sank to as low as $1,190 psf when a 2,626 sq ft unit at The Coast in Sentosa Cove was sold for $3.125 million. Caveats lodged with the Singapore Land Authority showed that the four-bedroom, second-floor unit was earlier transacted at $4.34 million – or $1,653 psf – on March 8, 2007. That means the seller lost $1.215 million.

Mr Donald Han, managing director of Chestertons, said: “Sentosa has always been on $2,000 psf and above. Once it goes below $2,000 psf, it’s typically competing for the same segment in the Marina Bay area, and Districts 1 and 9. With prices nearing $1,000 psf, it’s considered mass-market home prices,” he said.

“Two transactions don’t make a wave, but it is a good sign.”

Those two units were sold at $2,055 psf and $1,954 psf in April this year. One is a 2,788 sq ft four-bedder which gets a partial view of the sea and was sold for $5.73 million. The adjacent unit – a 1,765 sq ft three-bedder – was sold at $3.45 million, and does not have much of a view.

PropNex division director Alex Low, who has been actively marketing properties in Sentosa Cove, said: “Both units are located on the second storey and do not have much of a view to offer. Yet both could fetch such a high price psf.

“The last condominium I sold at The Oceanfront at $2,190 psf, was in October 2012. It was a high-floor unit with full sea view.

“It took two years to see another unit transacted above $2,000 psf. But it’s a good sign in a sluggish property market, which is seeing buyers trying to push prices down.”

Mr Ku Swee Yong, chief executive of Century 21 Singapore, said the two units that were sold in the $2,000 psf range represented “a good boost to our confidence in Sentosa Cove”.

“At $2,000 psf, you can get a freehold property on Orchard Road. But you can’t get the sea view and surroundings that you get in Sentosa,” he said.

“It’s difficult to say if there is a trend up. There are too few transactions to take reference. Even at $2,000 psf, it’s a drop off its peak. Most of the high prices in Sentosa were set in 2008.”

Ms Jackie Yeh, who owns 11 condominium units in Sentosa Cove, eight of them at The Oceanfront, remains optimistic and felt that units in Sentosa that were reportedly sold at huge losses were isolated cases.

“Sentosa is very exclusive. I bought my units there at very affordable prices when the projects were first launched.

“If I am to sell any of my units now, I would still make a profit. But I am confident prices will pick up in the long term and I am holding out.”

The men behind the $31 million coffeeshop deal

The seller ran a noodle-making business

The seller of Yong Xing Coffee Shop in Bukit Batok, which was sold for a record $31 million, had bought the 4,521 sq ft coffee shop for $3.4 million.

Mr Tan Han Swee, 77, who has been in the food and beverage business for about 50 years, made more than an 800 per cent profit in the record-breaking deal for a Housing Board coffee shop.

Mr Tan is the managing director of Eng Heng Realty, which is registered as an investment company. The buyer of the coffee shop is a new company set up by the younger brother of Mr Ricky Kok Kuan Hwa, founder of coffee shop operator Chang Cheng Group.

Mr Tan, a Malaysia-born businessman who is now a Singaporean, is overseas and could not be contacted for comment. He and his family have been in the food and beverage business since the 1960s. Business records show they own another coffee shop in Jurong West through another company.

Some companies previously owned by Mr Tan were registered as manufacturers of noodles, vermicelli and macaroni.

Records also show that he owned a cake shop here in the 1960s and a noodle house in the 1980s. His family was also known to own a noodle factory in Taman Jurong.

Former Member of Parliament for Jurong, Dr Ho Kah Leong, 77, who has known Mr Tan since the 1980s, describes him as a hardworking businessman. “Every day, he would supervise the making of the noodles at his factory. They would be delivered by his wife, who drove a van to hawker centres and coffee shops. He is hardworking, jovial and his people skills are good.”

Buying the Bukit Batok coffee shop is only one of Mr Tan’s many shrewd business moves. Several of his contemporaries say he bought a nougat factory in Australia in the 1980s.

Records from the Australian Securities and Investments Commission list Mr Tan and several of his family members as directors in Golden Boronia, a nougat manufacturer with facilities in Perth. The brand is a household name in Australia and is billed as Australia’s No. 1 nougat.

Dr Ho says: “In the 1980s, nougat was not popular. From my knowledge, he was the only one who produced it in Perth.

“But because he created new types of nougat, people started buying them and business became good. He is a brilliant businessman who can look far ahead.”

News reports say Mr Tan was the vice-chairman of the Singapore Kway Teow and Mee Manufacturers Association. At the Singapore Food Manufacturers’ Association, he is an honorary life president, a position that honours the contributions of key appointment holders upon their retirement.

An active member in the community, Mr Tan was also on the advisory committee of Yuan Ching Secondary School in the 1980s and served on a Citizen’s Consultative Committee in Jurong in the 1990s.

He has donated money to charitable causes, including $10,000 towards the rebuilding of a temple in Boon Lay.

Mr Tan comes from a big family. A 2003 obituary for his mother in Lianhe Zaobao showed that he has three brothers and four sisters.

According to the Facebook pages of his family members, he has at least six children and 18 grandchildren. He is married to Madam Yiap Moi Hiang, 75, a Singaporean. The family man is a fixture at family events such as birthday celebrations and graduation ceremonies.

Several of his family members are registered to be living in two landed homes – located side by side – in Boon Lay. Property records show they bought the houses for more than $3.3 million in the late 1990s.

Mr Tan shuttles between Singapore and Australia, where some of his family members are based.

It is understood that the Tans did not know the coffee shop’s buyer before the deal, which was done through an agent. The contract to transfer the coffee shop is dated Dec 15 last year and the transfer was completed on May 29 this year.

When contacted, Mr Tan’s son, Mr Tan Beng Gim, 47, says his family is “very sad” about the sale.

Referring to the coffee shop business, he adds: “My father is old. If others can do it, let them.”

The deal beats the previous record of $23.8 million set in 2013 for a coffee shop in Hougang.

He says: “If the buyer dares to put in $31 million, he has a strategy. If you think he’s stupid, do you think the banks will lend the money to him? He knows the market.”

News reports have noted that the coffee shop at Block 155, Bukit Batok Street 11, has an attractive location because there is no hawker centre in the area and the nearest mall is a 15-minute walk away.

Since the transfer, some tenants have reportedly said the rent has doubled to $6,500 a month.

The buyer runs more than 20 coffee shops

Singapore’s new coffee shop king is no stranger to the business.

According to news reports, Mr Paul Kok Kuan Pow already runs more than 20 coffee shops here.

His older brother, Mr Ricky Kok Kuan Hwa, 46, is also in the same business and heads the Chang Cheng Group which, according to its website, runs more than 220 food outlets and 30 coffee shops, including the Chang Cheng Mee Wah chain of coffee shops.

The younger Mr Kok, who is in his early 40s, is one of two directors of EH 155, which paid $31 million for the coffee shop in Bukit Batok. The other director is a Malaysian named Cho Kim Wing.

Mr Paul Kok declined to be interviewed. Business records show that he is also a director in at least 36 food and beverage-related companies here, and a shareholder in at least 31 of them.

The sixth of seven children was born into a poor family in Seremban, Malaysia. His parents died in a car accident when he was about 16.

He attended university in Malacca and operated a fast-food restaurant there.

In 2000, he came to Singapore and joined his brother’s Chang Cheng Mee Wah chain of coffee shops.

After working for his brother for 10 years, Mr Paul Kok rented his first coffee shop, in Tampines, with the help of his brother.

Mr Ricky Kok tells Life: “I took care of the finances and he managed it. Since our parents died, our family has always supported one another whenever we could.”

From there, the younger Mr Kok built up his business. Brushing aside suggestions that his brother might one day outshine him, Mr Ricky Kok says: “This industry is so large. Even if you wanted all the money for yourself, you won’t be able to earn it all.

“My brother is more hardworking and much more educated than I am. He deserves all the success he gets.”

Mr Paul Kok is married to Ms Tan Swee Lai, a Singapore permanent resident in her 30s.

The couple have four daughters – aged 10, eight, five and three – and live in a condominium in Bukit Batok.

Friends and employees describe him as a quiet and unassuming man who prefers to keep a low profile. Not one to flaunt his wealth or authority, he is known to visit the workers at his coffee shops dressed simply in a polo shirt and pants.

He drove a small Lexus until last year, when he switched to a Toyota Wish MPV to accommodate his family.

Says an employee who has worked for Mr Kok for five years: “He’s not a picky boss. I’ve seen him scold workers when things go wrong. But he’ll also praise workers for good work.”

Mr Kok is a patron of the Clementi Town Shop Owners’ Association and was a committee member.

Says the association’s chairman, Mr Lim Hai Teck, 56, who has known him for about 10 years: “Even though he was our youngest member, his feedback was thoughtful. He is capable and extremely hardworking. He would start work before the sun rises and finish after it gets dark.”

Mr Kok enjoys singing karaoke and is known to sing with his friends and business associates in the VIP rooms of Chinese restaurants such as Yunnan Garden Restaurant, off North Buona Vista Road.

He loves belting out Mandarin and Cantonese songs, such as the ballad Just Want To Spend My Life With You by Hong Kong singer Jacky Cheung.

He is also an avid cyclist and took part in a fund-raising cycling event last year for Club Rainbow (Singapore), which helps chronically ill children and their families.

According to the event’s website, Mr Kok raised more than $42,000 – the third-highest amount by an individual rider.

His tagline, which was published on the website, read: “To make the world a better place for all”.

Rate hike not always bad for office capital values

With the impending interest rate hike later this year, there has been much concern over the adverse impact on office capital values.

Since the start of the Quantitative Easing (QE) by the US Federal Reserve in December 2008, the Urban Redevelopment Authority (URA) office property price index (PPI) has been up 43 per cent, thanks to the strong capital flows into Asia and the ultra-low interest rate environment which makes borrowing much cheaper.

According to real estate database provider Real Capital Analytics, capital inflows into Asia real estate rose from US$25.2 trillion in 2009 to US$54.9 trillion in 2014, growing at a compound annual growth rate of 16.9 per cent.

Given the increased demand from investors seeking higher returns, property markets in Asia have been on a multi-year boom, with prices in many gateway cities surpassing the previous peaks.

Now that QE has ended and an interest rate hike is looming, banks globally as well as in Singapore are set to raise their interest rates by the end of this year.

In fact, the fear of a possible impending rate hike has already cooled the investment sentiment somewhat, reducing total Asia real estate investment volume by 13 per cent year on year to US$20.6 trillion in the first five months of the year.

Conventional wisdom is that rising interest rates could affect office capital values in three ways.

Firstly, the fair market value of any real estate can be determined using the universally accepted discounted cash flow model. A higher interest rate increases the cost of capital, resulting in a lower net present value, ie a lower capital value.

Secondly, the capitalisation rates of the commercial property will have to be higher in a rising interest rate environment, as investors demand higher returns on office assets. If the rents remain constant, valuation will have to go down which leads to a fall in asset prices.

Lastly, on the demand front, an increase in the cost of debt also results in lower investment spending to avoid high interest payment. Lower investment demand reduces the attractiveness of the assets, causing prices to correct.

Values appreciate

Surprisingly, our research seems to suggest that the converse is true, which means that when interest rates rise, capital values actually appreciate more often than not. To simplify the explanation, only movements of the URA office PPI are illustrated here; but the same conclusion can be reached by using the URA residential PPI.

In our analysis, we investigate the movement of office PPI in relation to the three-month Sibor, or Singapore interbank offered rate, from Q3 1987 to Q1 2015.

There were altogether 44 quarters in which the three-month Sibor increased from the preceding quarter. Out of the 44 quarters, the office PPI decreased in only 15 quarters (34 per cent), but increased in all the other 29 quarters (66 per cent).

Even after accounting for the lagging effect (as the impact of rising interest rates on properties may not be felt immediately), the same conclusion still holds true.

Of all the quarters where the three-month Sibor rose, the office PPI still increased in 60 per cent of all the quarters, regardless of whether the impact was felt one quarter or two quarters later.

If this does not suffice, we also carried out the analysis of the PPI trends when there is a continuous rise in interest rates. Surprisingly, we still come to the same conclusion that office capital values tend to increase when interest rates rise.

From the historical movement of the three-month Sibor, five different periods of sustained increase in interest rates with no less than one percentage point over at least eight quarters are identified. They are from Q1 1988 to Q2 1990, Q1 1993 to Q4 1994, Q1 1996 to Q4 1997, Q1 1999 to Q4 2000, and Q1 2004 to Q2 2006.

With the only exception of the period from Q1 1996 to Q4 1997, which was the prelude to the Asian Financial Crisis, office prices continued to climb even during periods of sustained interest rate hikes.

So our analysis concludes that historically when interest rates rise, more often than not, office prices in Singapore also tend to increase. Therefore, it seems that the fear that the real estate market would crash as a result of the Fed rate hike may turn out to be unfounded.

So what is supporting the office prices when interest rates go up?

The main reason why interest rates need to be raised is no other than strong economic growth. The central banks tend to hike interest rates during periods of strong GDP growth so as to combat inflation and prevent the economy from overheating.

Positive impact

Strong growth in economic activities also have a positive impact on wealth creation, which props up investors’ confidence in real estate investment. It is the belief that prices will continue to shoot up that drives the demand for real estate. If the physical stock is not able to satisfy the increased demand and supply does not keep up the pace, a demand-supply imbalance will be created, leading to further price increases.

As a result, any dampening effect of rising interest rates seems rather negligible in the face of the positive effect arising from the strong economic growth.

So what does it mean for real estate investors?

A rate hike will only occur when the US economy is on a solid footing. A solid US economic recovery bodes well for the Singapore economy and its asset prices. However, the Fed has repeatedly shown its unwillingness to hike the interest rates at the slightest hint of weaknesses in the US economy. In addition, after Greece rejected the bailout terms in the landslide referendum on July 5, the Fed may be less inclined to raise interest rates should the financial crisis in the eurozone deepen.

What this means is either our office capital values will continue its upward trajectory should the rate hike be sustained, or falter because the US recovery is not on track, in which case, the persistently low interest rate environment looks set to continue for a while longer.

Tech workplaces get cool makeover vibe

TECH companies here now are paying more attention than ever before to the physical environment of their work spaces, spending good money to build “cool” offices, in the process bolstering the global office furniture market.

And research firm CSIL has found that this market is no small potatoes; it is worth US$47 billion, and Singapore is one of 60 lead players.

Michael Ptacek, founder of OfficeLovin, a Prague-based website showcasing the world’s most inspiring tech-company offices, said: “Tech offices today look like apartments. More have moved away from cold, corporate-like interiors to cosy and hipsterish spaces. We see lots of wood, collaboration zones and recreation rooms with ping pong tables.”

Vinnie Lauria, managing partner of Golden Gate Ventures (GGV), said the tech scene in particular is unlike any other in that they work at coming up with creative solutions to problems while using any space available – garages, shophouses and even living rooms.

Taking GGV as an example, he likened its culture to that of a Silicon Valley startup – comfortable, informal and with a relatively flat structure. Its two-storey shophouse unit in Duxton Road does not have a private office for the chief executive; its open concept and big couch used for meetings are designed for people to feel relaxed and to speak their minds, he added.

About S$30,000 went into reverting the space from a mass of office cubicles to what it originally was. Mr Lauria said: “When we first took over, there were drop ceilings and office carpeting – two things that kill the creative spirit. Now, the cement floors, open ceilings and an exposed brick wall give the office a raw feeling, like a cool coffee shop instead of a cubicle farm.”

In like manner, the office of digital storybook creator Paperplane has nailed the look – from its handmade pendant lights and coffee table upcycled from wooden pallets down to the squiggly, colourful paint on its floors. The startup spent some S$15,000 in renovations, the result of which reflects its creative, collaborative, hands-on and playful culture, said its founder Chrissy Lim.

“Startups are incredibly personal to the founder. In the early stage, when our passion is burning bright – long may it last – everything is a reflection of our vision, especially the space where we create the product,” she said.

An aesthetically inviting workplace helps with attracting and retaining talent in a competitive labour market; it can be a huge sense of pride for employees who, over time, develop a sense of belonging to the place, said Teo Jia En, co-founder of vacation and short-term apartment rental site Roomorama.

At the heart of its Amoy Street office is a large pantry, which holds an “obligatory” foosball table and a recycled-wood dining table where the team meets for daily lunches.

Nick Nash, group president of Singapore-based mobile gaming and communications company Garena, said office design is essential in creating a conducive environment that can bring out employees’ creativity, so they achieve the unimaginable.

In six years, the company has grown from a team of 20 into a 3,000-strong, US$2.5 billion regional company. Garena Singapore is looking to bulk up its team to 500 employees, who will work out of a new 80,000 sq ft, two-storey office at Fusionopolis.

Mr Nash said: “Regardless of the individual’s preferences and work habits, Garena’s inclusive employee welfare programme and wide range of facilities ensure that everyone is catered for.” The amenities include in-house massage services, beds for power napping, standing desks, a fully-stocked cafeteria and tea points, and air hockey, pool and foosball amenities.

But not all offices are “cool” this way – or even feel the need to be so. Take real estate startup’s, for instance. Its chief executive Darius Cheung is unapologetic about the company’s scrappy, largely untreated ground-level office at Blk 71 in Ayer Rajah: “Engineering is at the core of what we do and it shows through our pragmatic, no-vanity approach to our office.”

But’s did splurge on one thing for its employees – Leap office chairs. Half of the S$25,000 set aside for office renovation went into these chairs by Michigan furniture maker Steelcase; they support various body shapes and sizes.

The company, however, bought them second hand at about S$450 apiece. They retail at about S$1,000.

Said Mr Cheung: “We care about the important things, such as how to make it comfortable and healthy for our team to spend the bulk of their day working, rather than to add frivolous things that are really for show and will lose value after the first-glance.”

Last Friday, more than 130 tech companies opened their doors to 3,500 members of the public at Walkabout SG 2015, an annual city-wide open house for technology companies.

Organiser Kristine Lauria, GGV’s Mr Lauria’s wife, said: “Walkabout enables companies to show why they’re an exciting place to work in and meet people with similar interests in a fun, casual setting where they can build relationships without any pressure or agenda.”

She added that the event lets the Singapore tech ecosystem flex its muscles and show the rest of the world that Singapore is an important place to be for tech in Asia.

Mrs Lauria quipped: “This isn’t the (Silicon) Valley, it’s the jungle!”

All 10 Confirmed List Industrial sites on 20-yr lease

THE government has placed only 20-year leasehold land parcels on its confirmed list of industrial sites for sale in the second half of this year – a move that has set some market watchers wondering if 20 years is the new norm for industrial land tenures.

On that, a Ministry of Trade and Industry spokesman told BT that the launch of sites with a 20-year tenure “aims to lower the upfront costs for industrialists looking to custom-build their own facilities or to purchase strata-titled properties”. “Our intent is to provide more options for industrialists looking for affordable industrial space,” the spokesman said.

Ten sites zoned for Business-2 or heavier industrial use are placed on the confirmed list of the Industrial Government Land Sales (IGLS) programme announced by MTI on Monday. Nine sites are located in Tampines or Tuas and one at Tanjong Penjuru. No site zoned for Business-1 or light industrial use is offered under the confirmed list this time round.

But a B1 site at Woodlands Height with a 30-year tenure is placed under the Reserve List, along with three B2 sites that are respectively located at Tuas South Link 1 (30-year tenure), Tuas Bay Close (30-year tenure) and Tampines Industrial Drive (20-year tenure). Sites on the Reserve List are triggered for sale if there is sufficient market interest and a minimum acceptable bid is submitted by an interested party.

JTC will be the sales agent for all the sites on the Confirmed and Reserve Lists. The moderate supply of small units with shorter tenure is seen as an ongoing government strategy to taper the supply of industrial space from an earlier ramp-up.

The MTI spokesman said the government has been rolling out more B2 sites because they can be used for both general industrial use as well as clean and light industrial use, offering industrialists greater flexibility.

The higher gross plot ratios (GPRs) for the smaller sites in the new IGLS programme translate into a higher maximum gross floor area of 1.115 million sq ft from all sites on the Confirmed List, slightly higher than the 1.067 million sq ft from the H1 2015 Confirmed List. SLP International executive director Nicholas Mak reckoned that the higher plot ratio, up from a typical GPR of 1.0 for small industrial sites, could be an attempt to encourage buyers to increase the intensity of the development and usage of such sites.

“All the small sites are too small to be efficiently developed into ramp-up factories,” he said. “With a plot ratio of 1.4, the small site could potentially be developed into a four to six-storey flatted factory or terrace factories, but with nine sites on the confirmed list situated in Tampines Industrial Drive and Tuas South Link 2, flatted factories are not expected to be popular in these two locations.”

Mr Mak pointed out that even the Tanjong Penjuru site that can be developed into a multiple-user factory by a developer has a 20-year tenure. “It appears that the government is trying to test whether the market would accept 20-year land tenure as the new norm,” he said. Colliers International director of research and advisory Chia Siew-Chuin noted that the government’s move to place all the 30-year leasehold sites on the reserve list is a welcome one, given the sluggish sales momentum and ample pipeline supply.

But she found it “somewhat surprising” that the government has decided to include a new 30-year leasehold site at Woodlands Height in the H2 2015 Reserve List, given the ample supply in the north region.

“There are no sites in the Central locality/prime industrial areas like Ubi; this is different from H1 2015 where the government placed a 30-year leasehold B1 site located at Ubi Avenue 1 on the Confirmed List.”

The government has since mid-2012 slashed industrial land leases to a maximum of 30 years and rolled out sites with shorter tenures. It also introduced other measures such as restricting the use of industrial premises, having a minimum size for each unit, and banning strata sub-division of projects on selected sites in the first 10 years after the project’s completion.

JTC also lengthened the prohibition period for lease assignments and increased the minimum occupation period for anchor tenants who do sale and leaseback arrangements on JTC-leased sites.

Mr Mak, however, questioned if the shortened tenure for industrial sites has indeed cooled industrial land prices. “If 20-year leasehold becomes the new norm, then 30-year leasehold sites will be worth more, the 60-year leasehold sites will be worth even more, so the property costs will go up,” he posited. He is also concerned about whether buyers of 20-year leasehold strata units will have difficulties in obtaining sufficient mortgage financing due to the short land tenure.

Consultants believe it is unlikely that developers will trigger any sites on the Reserve List, amid substantial completions of industrial projects from this year.

R’ST Research director Ong Kah Seng noted that the land parcels in Tuas on the Confirmed List may be targeted at end-users. But there have been many small Tuas plots rolled out previously and have generally met the demand from industrialists looking at small plots.

While there may be ongoing demand from industrialists, contractor-developers, or even developers for industrial land parcels in Tampines, bidding interest for the five Tampines plots on the Confirmed List will likely be cautious, he said.

Suntec Reit sells Park Mall

Suntec Real Estate Investment Trust (Suntec Reit) has entered into a conditional sale agreement for the sale of Park Mall at a price of S$411.8 million, said the Reit manager ARA Trust Management (Suntec) on Monday.

The sale price is based on a property valuation by Colliers International.

Suntec Reit will use part of the proceeds from the sale to fund a joint venture company which has been set up to redevelop Park Mall into a commercial development comprising two office blocks and a retail component.

Suntec Reit has a 30 per cent interest in the joint venture company, Park Mall Investment Limited. Phoenix 99 and Haiyi Holdings each have a 35 per cent interest in the joint venture.

Suntec Reit acquired Park Mall in 2005 for S$245.1 million. Park Mall is an integrated office, lifestyle and home furnishing mall located next to Dhoby Ghaut MRT.

The property is more than 40 years old, with remaining land lease tenure of 53 years.

ARA Trust chief executive Yeo See Kiat said in a statement that the redevelopment would enhance the gross floor area of the site.

Suntec Reit will also have the ability to own part of the redeveloped property by acquiring one office block upon completion, he said.

Prime Waterfront Homes and Living in Singapore


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