Mall on Singapore’s Orchard Road Said to Receive Offer From Indonesian Developer

Less than two months after a mainland Chinese buyer walked away from a deal to buy the Far East Shopping Centre on Singapore’s Orchard Road, the committee representing the owners of the strata-title property has received a new offer said to represent a price more than 6 percent below the bid in the failed earlier sale.

An Indonesian developer new to the Singapore market is said to be offering S$850 million ($630 million) for the property near Orchard’s intersection with Paterson Road, according to sources familiar with the deal who spoke with Mingtiandi. That offer follows Du Shuanghua’s Bright Ruby Resources withdrawing its S$908 million bid for the ageing building after failing to win approval to expand the floor area permitted for a new project on the 999-year leasehold site.

After the failed Bright Ruby deal, which had been agreed to in late September, the owners of the Far East Shopping Centre had put the property back on the market last month at a guidance price of S$928 million in a collective sale effort which ended on 2 May. Representatives from CBRE, which managed the tender, had not yet responded to inquiries from Mingtiandi by the time of publication.

The new offer, which was first reported by the Business Times, is said to still be well above the building’s valuation, but has yet to be approved by the owners of the 290,574 square foot (26,995 square metre) property, who are reported to be meeting later this month to consider the bid.

Scheme Dreams

As reported, the new offer values the 1970’s vintage property at S$2925 per square foot, with the new owner expected to develop a new project on the site at 545 Orchard Road.

Bright Ruby had terminated the earlier deal after failing to win approval to expand the floor area of the project by up to 20 percent under Singapore’s Strategic Development Incentive (SDI) scheme.

That failure had pushed the price of its project to S$3,125 per square foot from the S$2,604 per square foot it had hoped to achieve through inclusion in the programme, which allows developers which aggregate two or more commercial properties into a new project to expand the plot ratio, if they incorporate residential space into their design.

With the owners of Far East Shopping Centre unable to interest the landlords of neighbouring properties in working together in a sale, they will now need to decide if this latest opportunity represents their best option.

With interest rates remaining elevated and commercial rents in Singapore showing signs of cooling, trades of income earning properties in the city-state totaled $1.8 billion in value during the first quarter, down 56 percent from a year earlier, according to MSCI Real Assets.

Focus on Orchard

Should the sale of the Far East Shopping Centre move forward, the project would join a wave of Orchard Road redevelopment efforts, as the government encourages revitalisation of the famed shopping belt.

Next door to the mall is Hotel Properties Ltd’s (HPL) Voco Orchard Singapore hotel, which, together with HPL’s neighbouring Forum mall and HPL House, has already been approved for redevelopment by Singapore’s URA.

One block to the west, Delfi Orchard, an 11-storey retail and apartment complex majority owned by City Developments Ltd (CDL), was launched for collective sale last month at an asking price of S$438 million, potentially paving the way for a new project.

With major property transactions becoming scarce, Singapore’s collective sales market has stayed quiet this year, with the island nation recording its first successful collective tender in April with the S$49 million sale of the Sin Ming Centre commercial and residential building in the Upper Thomson area to Apex Asia Development.