TE Capital, LaSalle Near Sell-Out of Cecil Street Office Project in Singapore

TE Capital and LaSalle Investment Management are close to selling two-thirds of their joint venture office project on Cecil Street in under five months as investors continue to buy up floors in the freehold project in Singapore’s central business district.

Units of Singapore-based Thye Hua Kwan (THK) Moral Charities are in the process of acquiring the 10th and 14th floors of the soon-to-rise Solitaire on Cecil tower, a joint project by TE Capital and LaSalle at 148 Cecil Street, for about S$103.33 million according to people familiar with the matter, confirming a transaction first reported by the Business Times.

A source reported that another office floor in the building is being sold in a deal brokered by CBRE with details of that deal not yet disclosed. The deals for these three levels come after brokers Singapore Realtors Inc (SRI) and Gillian Chee of Global Impact Assets earlier this month reported via social media that they had each sold one floor to bring the May total to a third of the building’s total office space.

Should the latest pair of deals result in sales, TE Capital and LaSalle will have sold 10 of the 15 office floors in the 20-storey tower since beginning previews in January, with prices ranging from S$3,865 per square foot for the sixth floor to a record high of S$4,325 per square foot for the top level.

Selling Out Fast

With only five office floors still available in the project three years ahead of its target completion date in 2026, the “pace of sales is very positive” for the remaining strata units, a market source told Mingtiandi.

THK is said to be in the process of obtaining regulatory approvals for its two office floors, which Mingtiandi understands are being sold for about S$4,150 per square foot of net salable area of 24,900 square feet.

The non-profit group, which operates a network of charity centres and services in Singapore, is said to be purchasing the office floors for rental income and as a way to diversify its investment portfolio, according to a company representative quoted in the BT account.

The organisation’s charity arm, THK Moral Charities, is purchasing the entire 10th floor while its community hospital operator, Ang Mo Kio-THK Hospital, is acquiring seven strata-titled units on level 14, with the remaining unit being acquired directly by THK Holdings, according to the market source.

CBRE is understood to have brokered the deal but representatives from the property consultancy had not yet responded to queries from Mingtiandi by the time of publication.

Strata Gains Traction

SRI said on LinkedIn on 2 May that it had sold the 11th floor, which measures 12,465 square feet, to an unidentified buyer. In a separate post Chee, founder and managing partner of Singapore-based advisory and asset management firm, GIA, said she had brokered the sale of another floor in the building for S$4,264 per square foot or around S$56 million without disclosing the identity of the buyer.

The string of May sales come after a local company set a new Singapore price record for the purchase of an office property late last month when it picked up levels 17, 18 and 20 of Solitaire on Cecil. During the project’s preview in the first two months of 2023, the sixth floor sold for S$3,865 per square foot while level 12 sold for S$4,196.

Rated as Green Mark Platinum – the highest ranking possible under Singapore’s system fo sustainable buildings – the office project is located within eight minutes’ walk of four downtown subway stations, including Tanjong Pagar MRT.

When complete, Solitaire on Cecil will add 192,000 square feet of office space to the city-state’s downtown core, along with 2,000 square feet dedicated to food and beverage as well as another 27,000 square feet allocated to green space, wellness facilities and collaboration areas.

The project is being built on the site of the former PIL Building, which the joint venture partners bought in February 2022 for S$323.8 million.

Commercial Market on the Rise

Prices of office assets in Singapore are on the rise in part due to growing interest from private investors and ultra wealthy individuals following government moves to restrict home prices, according to Tay Huey Ying, JLL’s research and consultancy for Singapore.

Tay said the 100 percent increase in homebuyers’ stamp duty for foreigners Singapore rolled out on 27 April is making commercial assets, like strata offices, more appealing to buyers.

“Strata office transactions have dominated the office investment sales market in the last six months, accounting for over 53 percent of the sales by value, up from an average of 15 percent over the past five years,” she said in comments on the first-quarter real estate statistics released 28 April. “Cash-flushed, ultra-high-net-worth individuals and family offices have been particularly active.”

The demand for strata office assets in Singapore is coming despite slowing rental growth and rising vacancy in the leasing market.

Average monthly rents for premium offices in the central business district climbed by just 0.2 percent in the first quarter, compared to the preceding three months, to reach S$9.59 per square foot. That rate showed a rapid deceleration from the 2.2 percent uptick seen for the full year of 2022, according to a report by Savills.

With vacancy levels likely to hover around 7 to 8 percent this year, the property agency expects rents in the city-state’s core commercial zones to grow by 2 percent for the 12 months of 2023.

Note: An earlier version of this story indicated that three floors in the building were under discussion at about S$4,150 per square foot of gross floor area. The story has been updated to the measurement as net salable area. Mingtiandi regrets the misunderstanding.