By Lyn Khoo
More commercial developments are jumping onto the collective sale bandwagon even as the success rate for such deals pales in comparison with that for residential developments.
So far this year, there has been no commercial sites sold en bloc, with all 15 collective sale sites sold being esidential developments. However, the heady success of residential collective sales is giving commercial property owners optimism that they, too, can make handsome gains. For some of these commercial developments, it is even more urgent that they sell soon because of their depleting leases.
Collective sale brokers said the pricing for commercial sites and the location are two critical factors.
Mixed-use sites with a retail component are harder to sell, given that the strata retail segment is struggling. In the case of residential cum-commercial sites, the commercial component can blow the reserve price out of the realistic range, one broker said.
Those on sale include Singapore Shopping Centre in Clemenceau Avenue, which has only 29 years left on its tenure and is here the secretariat of the Real Estate Developers’ Association of Singapore (Redas) is located. Redas, which has owned 5,264 sq ft of space at the top floor of the shopping centre (including 2,390 sq ft of roof terrace) since 1987 under a trust, is not part of the collective sale committee (CSC).
The actual reserve price and apportionment method will be determined at the next extraordinary general meeting after the valuation report is out, said CSC chairman John Lee.
For now, the reserve price for the retail-cum-office development near Dhoby Ghaut MRT station is expected to be around $250 million, according to its marketing agent Cushman & Wakefield. The project occupies 2,449.8 sq m of land area zoned “commercial” with a plot ratio of 4.2+.
Elsewhere in Tanjong Pagar, owners of freehold Realty Centre have also appointed Cushman & Wakefield as marketing agent. Realty Centre sits on a land plot of 1,021.9 sq m zoned “commercial” with a plot ratio of 5.6. No indicative reserve price has been set yet.
Both Singapore Shopping Centre and Realty Centre are in the midst of confirming their maximum gross floor areas with the authorities.
The public tenders of ICB Shopping Centre, Jalan Besar Plaza and Chinatown Plaza have closed without a sale being concluded.
Owners at Goldhill Centre and Katong Shopping Centre, which houses offices and shops, have set their reserve prices at $425 million and $580 million respectively, said Ms Christina Sim, director of capital markets at Cushman & Wakefield. This works out to about $2,600 per sq ft per plot ratio (with development charge) for Goldhill Centreand $2,100 psf ppr (without development charge) for Katong Shopping Centre, she said.
Other commercial projects at varying stages of the collective sale process include People’s Park Centre, People’s Park Complex, Golden Mile Tower, Golden Mile Complex, Golden Wall Centre, Tanglin Shopping Centre and Sim Lim Square.
Last Wednesday, Singapore Realtors Inc launched the collective sale of Verdun House, a commercial site near Farrer Park MRT station that consists of four shops and 12 apartments. Its tender will close on April 18.
Owners at Verdun House are asking for $60 million, which translates to $2,100 psf ppr.
Separately, Knight Frank last Wednesday launched the sale of a freehold commercial building along Joo Chiat Road, which is owned by a single owner, by expression of interest. The indicative price of $18 million to $20 million works out to $969 to $1,077 psf over the gross floor area.