An investment company which controls one of Asia’s largest family-owned shipping firms has snapped up an office floor near Singapore’s Orchard Road for S$24 million ($17.7 million) as the city-state’s strata office market continues to gather steam.
IMC Group, founded by the late Hong Kong tycoon Frank Tsao, late last month signed an option agreement for the purchase of the entire third floor of Nomu building at 20 Handy Road, just one block from Orchard Road, at a price equivalent to S$3,790 per square foot, market sources told Mingtiandi on Friday.
Once the deal closes in the fourth quarter, the firm, which helped lead the development of the Suntec City complex in the early 1990s, will take ownership of the 6,329 square foot (588 square metre) freehold floor from the founders of local design firm Woha Architects according to the people, confirming an earlier report by the Business Times.
The sale came after average prices for strata office units in Singapore hit S$3,107 per square foot in the first half of the year, which was up 14.5 percent from the preceding six months, and outstripped the average of S$2,237 per square foot in the first half of 2022 by 40 percent, according to data from Knight Frank.
Prime Prices the Centre City
IMC’s new office asset is located north of the National Museum of Singapore and within 10 minutes’ walking distance to the Dhoby Ghaut and Bencoolen train stations.
The source identified the sellers as Wohu founders Wong Mun Summ and Richard Hassell, who designed Nomu when it was transformed from a 1970s apartment block into a mixed-use development more than a decade ago.
Completed in 2009, the building now houses a mix of office and retail space, along with 50 apartments across its 12 floors spanning a gross floor area of about 60,000 square feet.
Sought for comment, Mary Sai, executive director of capital markets at Knight Frank Singapore said the S$3,790 per square foot IMC is paying seems fair considering its location near the city centre. The price was also lower than the record S$4,325 per square foot price fetched for the top floor in Solitaire on Cecil in April, with grade A office rents in the Orchard area averaging around 18 percent less than the city’s core office district during the second quarter.
While IMC has yet to comment on its plans for its new space at Nomu, Mingtiandi understands that the company plans to retain its existing office at Springleaf Tower on Anson Road.
While the group’s businesses now span shipping, investments, real estate and living management sectors, IMC has its roots in the shipping company started in Hong Kong by its late founder in the 1960s. IMC also took part in the development of Singapore’s Suntec City 40 years ago.
Savills is understood to have acted on the transaction but representatives at the agency declined to comment. IMC also had not responded to queries from Mingtiandi by the time of publication.
Supply Remains Tight
“There had been a general lack of new stock available for sale and the rapid sell out of Solitaire on Cecil is testament that demand for such strata offices in the CBD is strong,” Alan Cheong, head of real estate research and consultancy at Savills Singapore, said on Friday when asked to comment on the broader market.
TE Capital and La Salle Investment Management reaped S$321.8 million selling out all 15 office floors in their Solitaire on Cecil joint venture during the first half of 2023, dominating the top-end strata office sales so far this year.
Despite the sell-out, overall strata office transactions in the first half which fell by 20 percent from the S$814 million recorded in the latter half of 2022 mainly due to limited supply of high-end units, based on Knight Frank data.
Exacerbating the tight supply situation were new rules imposed by the city’s Urban Redevelopment Authority last year, banning strata subdivision of commercial properties in the downtown core.
Buoyed by persistently strong demand, the average selling price of strata office units jumped 40 percent to S$3,107 per square foot in the first half from S$2,237 per square foot a year ago according to Knight Frank.
Contributing to the robust demand for strata offices were foreign investors which have turned away from the residential market after the government hiked stamp duty on sales of housing assets in April, according to Cheong,
Grade A offices in central locations like Suntec City, Prudential Tower, The Central Clarke Quay and Springleaf Tower have been particularly appealing to foreigners, where strata transactions typically range from S$5 million to S$35 million each, he said.