People’s Park Centre in Singapore’s Chinatown on the Market for $1.3B

An ageing commercial and residential complex in Singapore’s Chinatown is back on the en bloc market for S$1.8 billion ($1.28 billion) in what could be the city’s largest collective sale ever.

More than 80 percent of the owners of the 31-storey People’s Park Centre (PPC) at 101 Upper Cross Street have agreed to put the complex up for public tender giving potential buyers the opportunity to develop a 821,017 square foot (76,275 square metre) commercial project on the site, sole marketing agent ERA Realty Network said on Wednesday.

“Given the prominent location of PPC in Singapore’s historical Chinatown and next to an MRT station, developers will recognize the attractiveness and potential of the commercial site,” ERA Singapore investment sales managing director Liam Hiap Tay said, adding that the property “may be redeveloped into a commercial complex comprising a shopping podium with an office tower.”

Should the tender succeed, it would rank as the city-state’s largest collective sale ever by total deal size, said Alan Cheong, head of research and consultancy at Savills Singapore, as more property owners in the Lion City look to sell assets amid a surging market.

Reserve Price Up By A Third

The owners of People’s Park are asking around S$2,620 per square foot of potential gross floor area for the complex, with the price taking into account the differential premium – a government charge for increasing the land intensity of a site – and a premium for securing a fresh 99-year lease term for the project, which now has 47 years remaining on its tenure.

Given its massive scale, the tender is likely to draw bids from the larger developers and consortiums according to Tay. This latest attempt at a collective sale comes three years after an initial 2019 try at a S$1.35 billion reserve price ended unsuccessfully even at 33 percent less than the current target.

Situated near the Chinatown MRT Interchange in the Outram planning district, the 1976-vintage integrated development comprises a four-floor retail shopping centre housing 324 retail stores and a pair of towers with 256 office units and 120 apartments.

With the current project already making use of the maximum built area on the 95,467 square foot site under the allowed plot ratio, the potential redevelopment project cannot be larger than the existing complex.

The site is within 10 minutes’ drive of the Orchard Road shopping belt, as well as key financial hubs like Raffles Place and Marina Bay, with the public tender set to end on 18 August.

Time for Renewal

Should the owners of People’s Park succeed in securing the reserve price, the sale would surpass CapitaLand’s S$1.34 billion purchase of the former Farrer Court in 2007 as the biggest collective sale ever. That project in District 10 has since been redeveloped into the 36-storey D’Leedon condo complex.

For Savills’ Cheong, the latest en bloc attempt reflects owner interest in cashing out of aging assets while taking advantage of rising real estate prices in the city.

“In an age where climate change is spurring the green building revolution, it would not be optimal to keep the building as is or even renovate it extensively,” he said. “A redevelopment is the likely option from an economic perspective.”

Commercial deals dominated real estate investments as the Singapore market surged last quarter, making up 76 percent of the S$8.2 billion in investment sales during the period according to Knight Frank’s latest market update.

In the leasing market, separate research by JLL showed grade A office rents in Singapore’s central business district rose for the fifth straight quarter to average S$10.74 per square foot per month in the period from April through June, nearing their pre-COVID peak of S$10.81.

Commercial Projects in Demand

The People’s Park tender follows a string of successful commercial en bloc sales recorded in the city-state’s central region this year,

Around 15 minutes’ drive north of People’s Park, a joint venture of Perennial Holdings, Far East Organisation and Sino Land agreed in May to purchase the Golden Mile Complex – a 1973-vintage asset on Beach Road – for S$700 million.

The consortium plans to build an integrated office, retail and residential development on the site just north of Singapore’s urban core.

In April, Fragrance Group founder James Koh won a tender for Verdun House, a commercial and residential complex in Rochor district’s Farrer Park area for S$55.1 million, with plans to renovate the retail property.

Less successful was an attempted tender by collective sale of the 50-storey International Plaza in Tanjong Pagar which kicked off in April this year. That attempted relaunch of the 368,781 square foot complex at a S$2.7 billion reserve price failed to find a buyer.

Commenting on the recent series of en bloc attempts, Cheong pointed to the advantages in operating costs and sustainability of redeveloping ageing commercial properties.

“The first few batches of commercial buildings sold post-independence are now reaching the 50-year mark,” he said. “Many of the older buildings may be very expensive to maintain because their design could not accommodate the latest need to be carbon neutral or at least carbon friendly. Moving forward, this green factor is going to create a greater impetus to redevelop.”