Successfully selling VisionCrest at the asking price could record the largest office deal in Singapore this year.
German asset manager Union Investment is set to test investor appetite for Singapore commercial real estate as agents begin marketing an office block near the Orchard Road shopping strip at an asking price of S$470 million ($350 million).
JLL and CBRE on Monday launched an expression of interest exercise for VisionCrest Commercial, a grade A office building at 103 Penang Road, on behalf of Frankfurt-based Union Investment at an indicative price equivalent to S$3,157 per square foot of net lettable area, according to a joint announcement.
The 11-storey, freehold asset, which is being made available on an en bloc basis, is among the few remaining strata-titled grade A commercial properties in the city centre, and is already titled as 10 office floors and 11 retail units.
“Being nearly fully-let, the building will provide a strong and secure cash flow to an incoming investor,” said Michael Tay, head of capital markets for Singapore at CBRE. “The asset also presents a unique advantage for an incoming investor to explore strata sell down as a potential exit strategy.”
Should the consultants succeed in finding a buyer for the property at Union Investment’s asking price, the deal would rank as Singapore’s largest office sale so far in 2023 and would be among the city-state’s five largest commercial transactions this year, according to Mingtiandi data.
Potential Landmark Deal
Union Investment purchased VisionCrest for an undisclosed amount 15 years ago on behalf of its 2004-vintage UniImmo: Global fund. The 148,854 square foot (13,830 square metre) asset forms part of a mixed-use development that also includes the 265-unit VisionCrest Residence and the House of Tan Yeok Nee, a national monument of Singapore which is currently used as corporate offices.
JLL’s Ting Lim
Among the tenants in the building are Manulife Financial Advisors, German sports retailer Puma SEA, conference organizer IBC Asia, coffee chain The Coffee Bean & Tea Leaf and global solutions provider Afton Chemical. Built in 2008, the building was refurbished in 2018 and 2020 to improve the main office lobby, lift lobbies, lift cars, restrooms and air conditioning system.
“The freehold tenure and palatable investment quantum will be attractive to a wide range of prospective investors from private wealth to institutional capital with value-add strategies,” said Ting Lim, head of capital markets for Singapore at JLL, noting that there has been an influx of family office funds seeking commercial opportunities in the Lion City for wealth preservation.
Considering its location in Singapore’s best-known shopping district and within a short walk of the Dhoby Ghaut MRT station, the property is set to benefit from upgrades to the Orchard precinct according to the property agencies.
Singapore’s Urban Redevelopment Authority announced a master plan to rejuvenate the Orchard Road area in 2020 with the scheme for a “green Oasis in the city” expected to boost property values.
The office rental market in the Orchard area has also been favourable to investors, with vacancy rates hitting a record low of 3.8 percent and rents growing by 10 percent in 2022, CBRE’s Tay said.
The expression of interest period closes on 17 August. Exiting the Singapore asset will leave Union Investment’s Asia Pacific portfolio with at least one property each in Seoul, Tokyo and Sydney based on data available on its website.
Globally, Union Investment has €424 billion ($467 billion) in assets under management as of 31 March.
Strata in Style
Should a deal for VisionCrest be consummated at or above the guide price, the deal would surpass Viva Land’s S$399 million March sale of 39 Robinson Road to China-based Yangzijiang Realty as Singapore’s biggest office transaction so far this year.
Asked to comment on the marketing exercise, Galven Tan, deputy managing director for investment sales and capital markets at Savills, said investors could bid jointly for VisionCrest to overcome the deal’s size.
“The deal quantum might be on the higher side but there probably is sufficient liquidity in the market for such an asset,” he said.
The opportunity to resell the building on a strata-title basis could appeal to investors following the successful marketing of Solitaire on Cecil, a strata office project on Cecil Street in the central business district being developed by LaSalle Investment Management and TE Capital Partners.
With sales starting off in the first quarter of this year, the partners set new price records for the city in selling out all 15 office floors in the project within three months of the official launch.
Another strata-titled commercial asset that went up for sale on Monday was a set of four adjoining retail units at the junction of Changi and Telok Kurau roads, in a district between Geylang and Katong. Marketed by Sakal Real Estate Partners, the portfolio is being made available at an indicative price of S$18 million or S$3,228 per square foot of strata area.
The retail units form part of the five-story Tedge residential development by local builder Macly Group slated for completion in the fourth quarter.
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