DBS Group has sold the PwC Building in Singapore’s financial district to Canadian insurer Manulife for an agreed value of S$747 million ($525.7 million) according to an announcement on Friday to the city’s stock exchange.
The deal for the 28-storey office tower provides Manulife with a new home for its expanding operations in the southeast Asian financial hub, while contributing about S$350 million to DBS’ consolidated net tangible assets and earnings, according to the company’s statement.
The transaction, which is expected to close by the end of this month, is the first deal for a non-strata-titled office block in Singapore this year, as the appetite for investment properties appears to be heating up, despite falling rents and a supply of new buildings scheduled to enter the market later this year.
En-Bloc Deal Valued at S$2100 Per Square Foot
As part of the agreement for the building at 8 Cross Street, Manulife agrees to take responsibility for repayment of an S$402.6 million loan on the circa 1999 tower. The 99-year leasehold property has a balance of 78 years on its usage rights, and with a net lettable area of 355,704 square feet, the deal values the office building at S$2100 per square foot of net lettable area.
DBS subsidiary DBS China Square originally developed the building, which has been nearly 50 percent occupied by PwC. The financial services firm has already signed a new lease for space at the Marina One project at Marina Bay and is scheduled to move there in the second half of this year.
Manulife Buys a New Home for Expanding SG Business
PwC’s relocation provides an opportunity for Manulife both to raise its profile in the city and to consolidate its team into single location bearing its company nameplate.
“Having our own Manulife Building in a prominent location in the CBD will help us further strengthen the Manulife brand and provide greater brand visibility to consumers,” a Manulife spokesperson said in an interview with the Straits Times. The company is said to be planning to occupy 120,000 square feet of the building by early 2019.
The Canadian firm currently has staff working from a few locations around Singapore, but may be interested in raising its profile following a regional bancassurancee partnership with DBS which began operating on January 1st.
SG Deals Flow as Market Prepares for Fresh Supply
The purchase by Manulife follows just a few days after mainland developer Fullshare Holdings announced that it had entered into an agreement to buy GSH Plaza, a prime office building in Singapore’s Raffles Place, for S$725.2 million ($512 million).
Unlike the PwC building, GSH Plaza has been sold in part on a strata-title basis. In late January, Stanley Ho’s Shun Tak Holdings acquired a stake in the TripleOne Somerset commercial complex on Orchard Road for S$305 million ($216 million) from Singapore’s Perennial Real Estate Holdings and six other companies.
These transactions come despite Singapore’s office market facing an influx of new prime space as Marina One and other projects prepare to come online in the coming year. In part because of this, premium and Grade A office rents slid by 6.8 percent in the fourth quarter of 2016 compared to the same period last year, according to Colliers International.