The partners plan to enhance VisionCrest Commercial with aesthetic and sustainability improvements
TE Capital Partners and LaSalle Investment Management have completed their S$450 million ($331 million) acquisition of the VisionCrest Commercial building in Singapore’s Orchard area, finalising the biggest office deal announced in the city-state in 2023.
The joint venture is between TE Capital and a fund managed by LaSalle, with SGX-listed builder Metro Holdings owning a 20 percent stake in the 11-storey office block through its partnership with a TE Capital affiliate, the parties said Monday in a release.
LaSalle, the fund management arm of property consultancy JLL, holds an effective 50.1 percent interest in the vehicle, with Singapore-based private equity shop TE Capital maintaining a 29.9 percent stake, according to a regulatory filing. The deal was first announced by TE Capital managing director Emilia Teo at last November’s Mingtiandi Singapore Forum.
“On behalf of our shareholders and investors, we are pleased to add this strategic asset to our portfolio,” Teo said in the release. “We believe the asset, which sits in the Orchard Road precinct with a historically low supply of high-specification office buildings, will enjoy strong capital value preservation and continue to see strong tenant demand.”
Enhancement Plans
The JV partners plan to enhance the property at 103 Penang Road with internal and external facelifts to improve VisionCrest’s aesthetic appeal, while security and visitor management system upgrades are envisioned to elevate the asset’s quality. Better end-of-trip facilities, EV chargers, bicycle spaces and solar panels are expected to boost the LEED Gold-certified building’s sustainability credentials.
TE Capital’s Emilia Teo announced the deal at last November’s Mingtiandi Singapore Forum
The total consideration in the VisionCrest transaction works out to S$3,023 per square foot of the property’s 148,854 square feet (13,830 square metres) of net lettable area. The agreed price is 4 percent below the S$3,157 price per square foot that the seller, German asset manager Union Investment Real Estate, had set in a marketing exercise last July.
“This landmark transaction signals the continued demand from global investors for high-quality freehold assets in the Singapore investment market,” said Ting Lim, head of capital markets for Singapore at JLL, which marketed VisionCrest on Union’s behalf.
The deal was announced just months after TE Capital, founded by members of the family behind Singapore developer Tong Eng Group, and Chicago-based LaSalle achieved record prices in selling out the office floors of their Solitaire on Cecil JV project in the central business district in the first half of 2023.
Located at Oxley Rise near Dhoby Ghaut MRT station, VisionCrest Commercial is one of the few high-end office buildings in Singapore’s city centre with approval for strata title sales, after the Urban Redevelopment Authority restricted new strata office developments in the urban core in 2022.
The local strata market is already seeing some buzz in the new year, with PGIM Real Estate and Indonesia’s Widjaja family looking to sell office floors at 108 Robinson Road and the 15 Scotts building, respectively.
Quality Over Quantity
Growth in Grade A office rents in downtown Singapore is expected to taper to 2 percent this year from 2023 levels amid a surge in new supply, according to Cushman & Wakefield.
George Goh, head of acquisitions and asset management for Southeast Asia at LaSalle
After rising 6.5 percent in 2022 and an estimated 2.5 to 3 percent last year, the introduction of three major projects into the market, as well as more cautious spending by major corporates, is expected to cool the market in 2024, the agency said in its Singapore Market Outlook.
The report noted that heightened supply — including nearly 2.6 million square feet of combined new space from IOI Central Boulevard Towers, Keppel South Central and Labrador Tower — could push Grade A office vacancy rates in the central business district to above 5 percent in 2024, even as demand picks up gradually throughout the year.
Despite the wave of new space, LaSalle remains optimistic about the outlook of the office sector in Singapore, said George Goh, the firm’s head of acquisitions and asset management for Southeast Asia.
“As the flight to quality continues, well-designed and high-quality offices will remain a lynchpin of corporate talent strategies,” Goh said. “Our plan for VisionCrest aims to address current and future occupier needs.”
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