PGIM Selling Pair of Singapore Office Floors as Strata Market Heats Up

PGIM Real Estate is selling a pair of floors in an office building on Singapore’s Robinson Road to a buyer said to be from mainland China, as private investors continue to dominate deals in the Lion City’s commercial market.

After launching a marketing campaign early this year to sell 108 Robinson Road floor-by-floor, the real estate investment management unit of Prudential Financial has secured a deal for the sale of the fifth and ninth levels of the property in Singapore’s central business district, according to sources familiar with the transactions who spoke with Mingtiandi.

Market sources reported that PGIM Real Estate has clinched the deal for the freehold floors at approximately S$3,800 ($2,969) per square foot, a price which aligns with the reported asking rate of S$3,800 to S$4,000 per square foot when plans for the marketing campaign were first revealed in January of this year. The marketing effort was formally launched in March with PGIM representatives declining to comment on the reported transactions.

The deal in the building between Tanjong Pagar and Raffles Place comes as new price records have been set for strata titled office properties in Singapore, with investors and owner-occupiers reported to see moves to reduce interest rates as a sign of a potential inflection point in the city-state’s commercial market.

More Sales Expected

With the fifth floor measuring 4,746.88 square feet (441 square metres) and the ninth floor spanning 4,757.64 square feet, PGIM is estimated to be in line to bring in more than S$36 million from the sale of the two levels, with buyers said to also be in talks for more units in the 12-storey tower.

PGIM representatives in May had confirmed that they were in talks for the potential of two floors in the building, with the company understood to have sold three floors in the building, once the latest transaction is completed.

“We have received firm offers and are close to sealing deals on two floors at 108 Robinson Road,” a PGIM representative told Mingtiandi at the time. “The freehold tenure of the building has received strong interest from discerning small businesses, private wealth and family offices who are keen on long-term wealth preservation.”

PGIM had acquired the 1970’s vintage office block, then known as the Finexis Building, from troubled local investment firm Sin Capital in 2021 for S$143 million, or the equivalent of S$2,608 per square foot.

Following the 2021 acquisition, PGIM upgraded the facade, installed rooftop photovoltaic panels and overhauled the mechanical and electrical systems at 108 Robinson Road, with the property having achieved Platinum certification under Singapore’s Green Mark regimen for sustainable buildings following the enhancements.

PGIM is understood to have taken a strata sales strategy for 108 Robinson as en bloc sales of commercial buildings dried up in the face of rising interest rates and diminishing institutional appetites for office assets.

Private Investor Favorites

While overall sales of income earning real estate assets in Singapore were down 49 percent in the first half of this year, compared to the same period in 2023, according to MSCI Real Assets, investors have set new price records for smaller-sized commercial properties in recent months.

Demand for freehold properties, which have no time limits on their ownership, has been particularly strong with market analysts pointing to policy moves to restrict investment in the residential market as driving more investors into the commercial market.

“Not only are premium freehold strata offices rare, but also tax friendly to investors as there is no ABSD (additional buyer’s stamp duty) nor SSD (seller’s stamp duty),” said Gillian Chee, a private equity real estate veteran and founder of advisory firm Global Impact Assets. She added that, “Newly upgraded strata offices like 108 Robinson Road are more a passive investment compared with residential investments where the landlord has to manage tenancy repairs and maintenance.”

Records Set

PGIM’s Robinson Road milestone comes as action in Singapore’s strata-titled office market has centred on the Orchard Road area in recent months, with Savills announcing last week that it had sold a pair of floors in the Tong Building in the shopping strip for a record price per square foot of S$4,988.

That transaction broke a city-wide strata market price record set earlier in the month in the same building. Also in the Orchard area, a joint venture between local private equity shop TE Capital and LaSalle Investment Management sold a pair of floors in the Visioncrest Orchard building on Orchard Road for S$4000 per square foot in a transaction Mingtiandi reported in September.

Those deals broke a previous strata office price record of S$4,300 per square foot set by TE Capital and LaSalle’s Solitaire on Cecil project, located just over a block from 108 Robinson Road, in mid-2023.

In 2022 the Singapore government further restricted development of strata-titled commercial projects, or subdivision of existing properties, in the city-state’s urban core, limiting supply as investor interest has continued to rise.