The Tong Building at the junction of Orchard Road and Mount Elizabeth
Just two weeks after a new price record was set for a commercial floor on Singapore’s Orchard Road, a two-floor transaction at S$4,988 ($3,896) per square foot has shattered that market benchmark for office space in the Lion City.
Luxury watch retailer The Hour Glass is purchasing the Tong Building’s ninth and tenth floors, each with a strata area of 6,867 square feet (638 square metres), for a total of S$68.5 million ($53.4 million), according to a bourse filing and a statement by Savills, which brokered the disposal by See Hoy Chan Realty and See Hoy Chan Land.
The deal, which is scheduled to close in December, topples the rate of S$4,562 per square foot paid for the sixth floor of the same 19-storey tower at the junction of Orchard Road and Mount Elizabeth, which Savills had announced earlier this month. The sales of the three floors reached nearly S$100 million in deal value and averaged S$4,845 per square foot.
“Savills has witnessed firsthand the robust interest in this iconic commercial building,” said Yap Hui Yee, the consultancy’s executive director of investment sales and capital markets. “The freehold status of the office floors adds significant long-term value, making it a compelling choice for those seeking to preserve their wealth and capital.”
Eager Bidders
The property consultancy said the Tong Building floors drew an “overwhelming response” from bidders including family offices, medical groups and owner-occupiers, with the latter being keen to set up corporate headquarters in Orchard Road and benefit from the prestige and location of the famed shopping strip.
Yap Hui Yee, executive director of investment sales and capital markets at Savills Singapore
The Hour Glass already has its corporate home on the Tong Building’s 11th floor, and it said in the filing that the two additional floors “have potential for its own use.” Healthcare group Parkway Hospitals secured a rare medical change-of-use approval when it bought the sixth floor.
Sales of full office floors are comparatively rare in Southeast Asia’s best-known retail corridor, and the market has been further constricted by the government’s decision in 2022 to ban development of new strata commercial properties in Singapore’s top business hubs, including Orchard Road.
“The limited availability of such properties in this prime location underscores their value and desirability,” Savills said.
The latest trades at the Orchard Road tower overtook the city’s previous champ among strata office deals, the S$4,325 per square foot sale of the top floor at the 20-storey Solitaire on Cecil, an under-construction project of TE Capital and LaSalle Investment Management in the central business district. Savills’ Yap brokered that 2023 sale as well.
Market Revival
The Orchard area also played host to the biggest office deal announced in the city-state last year, TE Capital and LaSalle’s acquisition of the VisionCrest Commercial building for S$450 million ($331 million). The partners are upgrading the asset to bolster its green credentials.
The government is encouraging redevelopment and rejuvenation along Orchard Road as part of plans to transform the area into a “green oasis in the city” through a programme scheduled for completion in 2025.
A pair of big-ticket deals jolted Singapore’s slumbering market in the second quarter, led by Mapletree Pan Asia Commercial Trust’s sale of the Mapletree Anson office tower in the Tanjong Pagar area to regional private equity titan PAG for S$775 million ($574 million) ― a deal ranking as the city’s largest office trade in two years.
In the other transaction, City Developments Ltd bought out the Delfi Orchard tower for S$439 million, with the Singaporean giant believed to be planning to combine the mixed residential and commercial complex with the neighbouring Orchard Hotel Singapore to create a residential, commercial and hotel project.
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