Published May 23, 2007
1 Finlayson Green gets $2,500 psf record offer: sources
By KALPANA RASHIWALA
(SINGAPORE) An all-time high for Singapore office property price could be in the making. Hong Leong Group is said to have received an offer for 1 Finlayson Green for around $2,500 per square foot of net lettable area (NLA), according to industry sources.
This is higher than the $2,200 psf record price for the local office market achieved more than a decade ago.
Based on the $2,500 psf understood to have been received for 1 Finlayson Green, the 19-storey freehold office block would fetch around $190 million.
The offer, believed to have been made by an overseas fund, is said to have been granted an exclusivity period by Hong Leong to conduct due diligence.
However, it remains to be seen whether Hong Leong, controlled by the Kwek family, actually sells 1 Finlayson Green or decides to hold out for an even higher price.
The group's listed property arm City Developments has been studying the possibility of spinning off an office Real Estate Investment Trust (Reit), so it may seem odd for the group to sell off 1 Finlayson Green now.
'However, this is a relatively small asset in the group's office portfolio and establishing a record price for 1 Finlayson Green would help to raise the valuations on the rest of its office buildings. So this will still benefit the group if it decides to go ahead with an office Reit,' as a seasoned observer put it.
The group's office portfolio in Singapore includes Republic Plaza, City House, Hong Leong Building, 80 Robinson Road, The Corporate Office, Commerce Point, and Fuji Xerox Towers.
The record price of $2,200 psf for office space was set in early 1996 when Straits Steamship Land, now Keppel Land, sold seven floors of what is now known as Prudential Tower in the China Square area to Prudential Assurance Company Singapore.
Just last week, BT reported the sale of Parakou Building, a spanking new freehold office block at the corner of Robinson Road and McCallum Street, for $2,013 psf of NLA, or $128 million. This is the highest per square foot price achieved in the current office cycle. The buyer was UK fund manager New Star and the seller, Parakou Shipping Group of Hong Kong.
1 Finlayson Green received its Temporary Occupation Permit in 1994.
Its NLA is around 76,000 sq ft.