Singapore’s Orchard Towers Fails to Sell at $1.2B Price Tag

Singaporean real estate firm Hiap Hoe announced that the attempted collective sale of Orchard Towers has failed, a year after owners of units in the notorious entertainment and office complex put the property on the market with a reserve price of S$1.6 billion ($1.2 billion).

The Orchard Towers committee did not receive an offer which reached the required threshold for the sale, so the collective sale process will not move forward, Hiap Hoe announced in a filing to the Singapore Exchange. Through its ownership of 59 strata units in the freehold property via its Golden Bay Realty subsidiary, including 21 shops and 38 offices, Hiap Hoe is the biggest landlord in the property in District 9’s prime Orchard Road shopping area.

Built in 1975, the complex includes an 18-storey tower with retail and office space along Orchard Road and a 25-storey building housing 58 private residential units and some commercial units along Claymore Road. The property sits on a 3,441 square metre (37,040 square foot) site located within a few minutes’ walk of posh addresses such as Cuscaden Road and the bungalows of Nassim Road.

Unit holders of Orchard Towers voted on 18 February 2022 to set the reserve price at S$1.6 billion, achieving the requisite 80 percent consent for the prospective en bloc sale. That price would have represented S$8,817 per square foot for the asset, which has 16,859 square metres of gross floor area and a maximum plot ratio of 4.9.

Prime Location

If the owners had found a buyer willing to meet their asking price, the transaction would have marked Singapore’s most expensive-ever collective sale, topping CapitaLand’s S1.34 billion purchase of Farrer Court in District 10 in 2007.

By setting a lofty price for Orchard Towers, the owners of the mixed-use complex best known for its nightlife establishments may have been counting on the property’s enviable location to land a buyer, even amid uncertainty in the en bloc market following the Singaporean government’s rollout of cooling measures two months prior.

Despite its seedy reputation, Orchard Towers houses the embassies of Romania and Cambodia as well as the consulate of Mauritius, among other tenants, and sits near a variety of high-end hotels and retail destinations. Hotels in the vicinity include the Four Seasons Hotel Singapore, the Grand Hyatt, and the St. Regis, while the Orchard Road area boasts nearly 30 shopping malls.

Orchard Road is being rejuvenated as part of a program proposed by the city’s Urban Redevelopment Authority in 2019, which among other initiatives would incentivise developers to convert ageing properties to other purposes such as hotels and homes.

Orchard Hub Still Popular

In February of last year, the same month that Orchard Towers went on sale, a company owned by the family of Indonesian lumber tycoon Sukanto Tanoto acquired the Tanglin Shopping Centre just 10 minutes’ walk to the west for S$868 million. The 12-storey commercial complex changed hands via collective sale at a 10 percent premium over the reserve price in the asset tender.

A further vote of confidence in the Orchard Road area came last December, when Royal Group, a private company controlled by local property magnate Asok Kumar Hiranandani, agreed to buy Ming Arcade, a seven-storey commercial building just across the street from Orchard Towers for S$172 million. The collective sale set a city-wide record high price of S$2,125 per square foot of buildable area, as the company plans to redevelop the prime site at 21 Cuscaden Road.

Singapore watch retailer Cortina Holdings underscored the neighbourhood’s appeal as an office location by springing for the entire fourth floor of the Thong Teck Building at 15 Scotts Road, a short walk from Orchard Towers. The company was granted an option to buy the floor for S$49 million.

Collective sales totalled S$3.6 billion in Singapore last year, about 40 percent more than the 2021 volume of S$2.2 billion and far more than the S$127.3 million recorded in 2020, according to data cited by CNA.

The strong year came despite cooling policies introduced in December 2021, when the government raised the additional buyer’s stamp duty (ABSD) rates for both locals and foreigners, except for first-time local homeowners, and tightened lending rules in a bid to reign in record home price growth in the city-state.