Lendlease Beats CapitaLand for $2.2B Redevelopment of Singtel HQ in Singapore

Lendlease bested rival CapitaLand for a S$3 billion ($2.2 billion) redevelopment project in Singapore as the Lion City’s largest telecom provider announced Wednesday that it would team up with the Australian builder to rebuild its Orchard area headquarters.

The two firms have agreed to enter into a joint venture to knock down Singapore Telecommunications’ four-decade-old Comcentre HQ near Somerset MRT at 31 Exeter Road and replace it with a new complex featuring two 20-storey Grade A office buildings with retail components by 2028.

“We look forward to partnering with Lendlease to create a lush green oasis in the heart of Orchard Road,” said Singtel group chief executive Yuen Kuan Moon. “With its unparalleled location in the centre of Singapore’s famous shopping belt with a modern urban design, smart workplace features and commanding presence, Comcentre will be an attractive location for progressive companies seeking a prestigious ‘deep green’ business address.”

The Australian developer’s win adds to its string of urban regeneration projects in Singapore, including the Paya Lebar Quarter, with the Aussie builder having beaten the other shortlisted developer, local property heavyweight CapitaLand — which like Singtel is majority-owned by state investment firm Temasek Holdings.

Smart and Green Building

Singtel will hold a 51 percent stake in the joint venture, with Lendlease taking the remaining 49 percent, with the combined entity paying the telecom giant S$1.63 billion for the land cost within the next two years while Singtel shoulders the differential premium payable on the redevelopment.

Located near Somerset MRT station, the soon-to-rise twin towers will have over 110,000 square metres (1.2 million square feet) of total gross floor area comprising mostly offices, with 3,000 square metres of space at the ground floor dedicated to retail including lifestyle venues, food and beverage, and Singtel’s flagship telecom store.

The new development will be roughly the same size as the current building by gross floor area and Singtel already has an in-principle approval from the Singapore Land Authority to extend the site’s 99-year leasehold term through 2089.

Based on independent calculations, the partners are spending S$24,545 per square metre for the overall redevelopment cost of S$2.7 billion including the land’s price tag, with the asset estimated to be worth S$3 billion in gross development value once completed.

“People around the world are increasingly demanding their workplaces operate more sustainably while incorporating the very latest smart building and digital technologies,” said Lendlease global CEO Tony Lombardo. “That’s exactly what the new Comcentre stands to be. Singapore is, undoubtedly, one of the world’s great cities and we stand ready to work alongside Singtel to create one of the world’s great workplaces.”

Financing will be a mix of external funding and equity commitments from Lendlease and Singtel, with the Temasek-owned firm committing up to S$570 million in equity. The ASX-listed firm will  be in charge of construction and asset management.

Singtel had engaged JLL to advise on the real estate, capital markets, negotiation, partner selection and design for the project, according to market sources who spoke with Mingtiandi.

Proceeds to Be Reinvested

Once the building is completed by 2028, the telecom giant will remain as the anchor tenant occupying roughly 30 percent of total space while the rest will be leased out to firms looking for premium office accommodation in the Orchard area.

“The redevelopment of Comcentre is in line with our capital recycling strategy to unlock the latent value of our assets and invest the proceeds in growth areas where we can achieve higher returns,” Singtel’s Yuen said. “This is a strategic move that will further strengthen our financial position, bring about an exciting next-generation workplace for our employees, and contribute to the rejuvenation of the Orchard Road precinct.”

The office block will also include a rooftop park, running track and a wellness hub, with smart and sustainability features integrated in line with the goal of achieving the highest green building rating systems in health, technology and sustainability like a BCA Green Mark 2021 Platinum certification.

Employing about 12,000 people in the city, Singtel will relocate staff to temporary offices in 2024 to give way for preparations and construction of the new building.

Bagging Redevelopment Projects

Sydney-based Lendlease is not new to redeveloping buildings in the Lion City. East of its Orchard Road project is the S$3.7 billion Paya Lebar Quarter mixed-use development that the firm completed in 2020.

The project involved a retail mall, three residential towers and three office towers sitting on a four hectare (9.9 acre) site, in line with the Urban Redevelopment Authority’s plan to rejuvenate Paya Lebar into an emerging city precinct and sub-regional business district.

Just last year, Lendlease announced a nearby project that it is undertaking alongside security firm Certis as the two redevelop the company’s Certis Cisco Centre in Paya Lebar after acquiring the pair of ageing buildings for S$150 million.