The Ming Arcade is just a few doors away from Orchard Road
Singapore’s Royal Group has agreed to buy a commercial building near the city’s Orchard Road shopping strip for S$172 million ($126.7 million), setting a city-wide record high price per square foot of buildable area as it plans to redevelop the prime site.
With the current seven-storey structure set to make way for a new building measuring up to 55,046 square feet (5,114 square metres) of gross floor area, the private company controlled by local property magnate Asok Kumar Hiranandani is paying the equivalent of S$3,125 per square foot of accommodation, surpassing the S$2,910 per square foot record for an en-bloc deal set by Hong Kong’s Shun Tak Holdings when it purchased the Park House residential project on Nassim Road in 2018.
“Ming Arcade used to be an urban and vibrant lifestyle hub back in the 1980s and we are pleased and eager to embark on the rejuvenation of this enclave of Orchard Road precinct and restore the grandeur it deserves,” Hiranandani said together with his son and co-chairman, Bobby Hiranandani, in a joint statement late Thursday.
While the new owners have not yet laid out a concrete plan for their latest acquisition, Royal Group is likely to demolish the 1982-vintage building and begin developing a new structure on the freehold site around the second half of next year, according to Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore, who brokered the deal.
Sold at 34% Premium
Royal Group acquired its new prize through a collective sale by the strata-title owners of the building at 21 Cuscaden Road – which is less than a minute’s walk from Orchard Road and two blocks west of the intersection with Scotts Road.
Asok Kumar Hiranandani is planning to redevelop his latest acquisition
The 12,132 square foot corner lot is approved for development of up to 20 storeys and Hiranandani’s firm is paying a 34 percent premium over the S$140 million reserve price declared for Ming Arcade when Savills launched the public tender a month ago. The sale successfully united the owners of 88 strata-titled units in the aging commercial building.
Lake said investors, particularly high net worth individuals, were drawn to Ming Arcade given its freehold tenure, commercial zoning, approachable project size and proximity to Orchard Road.
“The bidding was very competitive so the buyers knew they had to be aggressive in order to be successful,” he added, noting the new commercial building will likely feature a combination of shops and offices.
The Ming Arcade sale was launched just days after Indonesia’s Widjaja family sold a set of strata office assets in the Thong Teck Building at 15 Scotts Road at the equivalent of S$4,028 per square foot.
In February of this year Indonesian lumber tycoon Sukanto Tanoto acquired the Tanglin Shopping Centre – just just four minutes’ walk from the Ming Arcade along Tanglin Road – for the equivalent of S$2,769 per square foot of built area, with Savills also brokering that transaction.
Two Record Deals In 7 Months
The Ming Arcade purchase marks the second record deal this year for Hiranandani, who ranks as Singapore’s 25th richest man with a fortune of $1.65 billion, according to Forbes.
Jeremy Lake of Savills speaking at a Mingtiandi event in October
In May, his Royal Group sold the So/ Singapore hotel – now called the Hotel Telegraph – in Robinson Road to Vietnam-based Viva Land for S$240 million, or S$1.8 million per key, setting a new record price per room for the city-state.
“We have set a track record of enhancing the districts in which we invest, develop and operate while looking forward to setting new heights,” the Hiranandani father-and-son duo said.
Royal Group’s portfolio comprises shopping malls, hotels, office towers, residential buildings and industrial projects across Asia Pacific, including the Sofitel Singapore Sentosa Resort & Spa and the upcoming Raffles Hotel in Sentosa.
The owners of the building were represented in the transaction by Thomas Toh, a solicitor with CTLC Law Corp.
Private Wealth Dominates
Booking record deals at a time of heightened economic uncertainty is both a sign of Singapore’s resilient commercial property market, and of the growing importance of private investors in the city-state, according to Lake.
“Generally, the outlook for the commercial market is strong and I think investors will continue to look for similar opportunities because they’re in a sweet spot,” Lake said of the mid-sized commercial transaction.
“The higher interest rates have resulted in institutional buyers going to the sidelines and in contrast to that, the private family office, ultra high net worth buyers, whether they’re Singapore or regional, they’re still actively looking for deals in Singapore,” he added.
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