This was Singapore’s biggest commercial investment deal in Q4

It involves the collective sale of Shenton House to Shenton 101 Pte Ltd.

According to a Savills report, Singapore’s commercial sector recorded a total of S$1.6 billion worth of investment sales in Q4/2023, which came from 13 transactions (all from the private sector). 

Although the transaction volume declined 35.0% from a quarter ago, the sales value only slipped a marginal 0.9% QoQ largely attributed to a few block transactions. 

Here’s more from Savills:

For 2023, investment sales more than halved from the high base of S$12.8 billion in 2022 to S$6.2 billion. The absence of mega deals has been a critical factor, along with the weakening confidence in commercial properties due to economic uncertainty and compressed yields caused by rapidly rising interest rates.

The biggest deal in the quarter was the collective sale of Shenton House to Shenton 101 Pte Ltd. Shenton House is a 25-storey office building with a three-level retail podium located at Shenton Way in the CBD. The 36,350-sq ft site is zoned for ‘Commercial’ use with a gross plot ratio (GPR) of 11.2 under the Master Plan 2019. Under the CBD Incentive Scheme, the site is eligible for a 25% bonus gross floor area (GFA) and can be redeveloped into a mixed-use commercial with residential development or a hotel at the GPR of 14.0. 

Therefore, at S$538.0 million, and after accounting for an estimated land betterment charge and a lease top-up premium to a fresh 99- year lease, the land rate was reported to be about S$1,885 per sq ft per plot ratio (psf ppr). 

There were another two significant block transactions in the commercial sector. The larger of the two was for VisionCrest Commercial that a joint venture of Metro Holdings, TE Capital Partners and LaSalle Investment acquired for around S$441.0 million. Located at 103 Penang Road within the Orchard Road tourist belt, this freehold commercial property comprises 10 office floors and 11 ground floor retail units with a net lettable area (NLA) of 148,854 sq ft. 

The other deal was the S$348.0 million sale of Wilkie Edge to Alpha Asia Separate Account managed by Keppel from Lian Beng Group and Apricot Capital. Wilkie Edge is an eight-storey complex comprising six office floors and two retail floors and located at the junction of Wilkie and Selegie roads. The price works out to S$2,211 per sq ft based on a total NLA of about 157,400 sq ft. 

In Q4/2023, investment sales of strata-titled office and retail units remained relatively stable. Six individual transactions that were priced S$10 million and above were recorded in the reviewed quarter, one less than a quarter ago.

On the other hand, shophouse sales activity continued to ease for a second consecutive quarter with only two transactions, the lowest since Q3/2020. Besides the reasons that we have mentioned repeatedly in our previous reports, the anti-money laundering investigation that started in August could have contributed to the poor sales.