A Singapore watch retailer has decided it’s time to own office space, and has sprung for an entire floor of an office building near Singapore’s Orchard Road shopping belt for S$49 million ($34.42 million).
Cortina Holdings, a Singapore-based distributor of Patek Philipe, Rolex and other high end brands, has been granted an option to buy the fourth level of the Thong Teck Building at 15 Scotts Road, just five minutes’ walk from where Orchard Road is undergoing a rejuvenation as part of a program proposed by the city’s Urban Redevelopment Authority in 2019.
Cortina, which plans to use the floor for its business operations, is paying the equivalent of S$3,568 per square foot of the 13,735 square foot (1,276 square metre) freehold office space. Cortina said in an SGX filing on Tuesday that the move to secure its own workspace comes just in time as the lease for its current offices nears expiration and its business seems set to expand.
“We also envisage organic growth of our group in the near term which in turn would increase our group’s requirement for office space,” the statement read. “Instead of renting such office space, we have been considering acquiring the same. The property would be able to satisfy our group’s need for office space.”
Watch Retailer Relocating Soon
In a cash transaction, Cortina is acquiring its slice of the 1973-vintage building from Singapore Institute of Management (SIM) Group, at a price 7 percent below the local private education institution’s target of S$52.5 million or S$3,822 per square foot when it put the asset on the market in late August.
Situated opposite the Far East Plaza shopping centre, and within 15 minutes’ walk of both the Orchard and Newton MRT stations, Cortina has chosen the nine-storey building as a home for its regional head office, which is currently housed in leased premises a few blocks away in Ngee Ann City Tower B at 391B Orchard Road.
As part of the deal, SIM will transfer existing lease agreements for the property to Cortina once the transaction is completed on 1 December, providing rental income for the retailer.
“Freehold strata office floors housed in good quality office developments in Orchard Road are tightly held and rarely made available,” Clemence Lee, CBRE capital markets executive director for Singapore at CBRE, said in an August statement when the asset was first put on the market.
CBRE brokered the deal but declined to comment further on the transaction.
Full office floors have proved to be rare commodities along Southeast Asia’s best known retail corridor.
The previous sale of a strata floor was five years ago when local property firm Top Global Ltd purchased the 18th storey of the Tong Building at 302 Orchard Road in October 2017 for S$23.3 million. That sale came two years after the family office of the founders of luxury watch and jewellery house Chopard snapped up level 13 in the same building for $25.5 million in May 2016, according to CBRE.
Lee said transactions of strata office units are now set to be further limited since Singapore’s Urban Redevelopment Authority in March banned development of new strata commercial properties in the city’s top business hubs, including Orchard Road.
URA has been actively promoting the revitalisation of Orchard Road by developing more public spaces, integrating a six-kilometre stretch of green space connecting existing parks and incentivising redevelopment of ageing buildings.
There have been a pair of major en bloc transactions along the Orchard Road strip this year, with Boustead Projects acquiring 30 Bideford Road in June for $371 million and Indonesian tycoon Tanoto agreeing in February to purchase the Tanglin Shopping Centre along Tanglin Road for $646 million.
Strata Market Slows, Values Rise
The sale of the Orchard Road floor comes as the volume of strata units changing hands in Singapore has dipped in recent months.
A report by Knight Frank showed strata office transactions in the first half slipped by 16 percent compared to the preceding six months to total just 145 units worth S$365 million.
While the volume of strata deals has declined, values of existing assets appear to be on the rise, with a pair of transactions in Suntec City in recent months having set successive price records for whole floors in the mixed-use complex.
In a deal announced by Savills earlier this week, a buyer from mainland China purchased the 31st floor of tower 2 in the 44-storey complex for S$41.14 million, setting a record price of S$3,350 per square foot for a whole-floor deal. That transaction surpassed the previous high water mark of S$3,300 per square foot set in June when a different mainland individual acquired the 30th floor in the same tower for S$38.8 million.