The joint venture between TE Capital and LaSalle Investment Management is planning to sell a new office building on Cecil Street

On an NLA of somewhat more than 190,000 square feet, the price estimate is anticipated as S$4,000 per square foot, which would equate to nearly S$760 million. In a separate development, the price per square foot of real estate on the 31st level of Suntec Tower 2 has risen to a new record high of S$3,350.

Sep 08, 2022

The joint venture between TE Capital Partners and LaSalle Investment Management, which owns the PIL Building along Cecil Street, is mulling over the possibility of selling the new 20-story freehold office complex that will be constructed on the site ahead of time.

It has been rumoured that the joint venture is planning to ask for a price of S$4,000 per square foot for the new project's total net lettable area (NLA), which is slightly more than 190,000 square feet. If this price is met, the overall value of the property would be greater than S$760 million.

The whole asset, as opposed to the strata-titled units that make up the asset, is what is going to be sold. According to the written approval that the Urban Redevelopment Authority (URA) gave for the planned project in the month of July, the development has the potential to be strata subdivided.

Solitaire On Cecil will be completed in 2026 and will have a height of 127 metres, which is an increase from the current PIL Building's height of 73 metres. It will primarily consist of office space, which will be spread across 15 levels and range in size from 11,000 square feet to 13,000 square feet. The average height of floor-to-floor spaces in recent office buildings in Singapore's central business area is between 3 and 3.5 metres, although all of the office floors in this building will have a height of 4.9 metres (16 feet).

A few establishments serving food and drink will be located on Level 1. Within the two floors of the basement, there will be 25 parking spaces available.

On Level 3, the project, which was designed by DP Architects, will include around 120 parking spaces for bicycles as well as facilities for changing and bathing at the end of a ride. A sky garden with quiet places, a gym, and other services will all be located on level 4. In addition to that, there will be a sky lounge on the roof of the building for communal gatherings.

The permitted gross floor area (GFA) for the project is 218,796.50 square feet, which represents an increase of approximately 50 percent, or 71,500 square feet, in comparison to the current floor space of 147,315 square feet. The GFA that has been granted for Solitaire On Cecil reflects the 11.2 plot ratio that has been mandated by the URA's most recent Master Plan for this commercially designated property. The land size of the property is 19,535 square feet, and it is divided into three plots, the largest of which is freehold and is around 14,985 square feet. It is bordered by two smaller plots, each of which has a 99-year leasehold land tenure that began in May 1977; the relevant authorities have granted the go-ahead to convert the land tenure of these two plots to freehold status.

In the beginning of this year, Solitaire Cecil Pte Ltd, the joint venture that is controlled by funds managed by TE Capital Partners and LaSalle Investment Management, successfully finished the purchase of PIL Building for the price of S$323.8 million. In addition to this, it will be required to make payments to the state in exchange for the rights to develop the extra GFA and to prolong the leases for the two smaller plots.

TE Capital Partners is a real estate investment management business that was created by Terence and Emilia Teo, two of the children of Teo Tong Lim, the managing director of Tong Eng Group. The Teos are the founders of TE Capital Partners, which will be the operational partner for the joint venture.

Pacific International Lines, which is majority held by Heliconia Capital Management, which is a wholly owned subsidiary of Temasek Holdings, has completed the sale of PIL Building. The deal was completed so that PIL may concentrate its efforts on its main businesses, which include container production, container shipping, and logistics.

In the second quarter of 2023, the demolition of the present structure that is 17 stories tall is anticipated to take place. It was finished in 1981, and the most recent update occurred in 2011.

Anxiety-inducing and unsettling time frame

Alan Cheong, executive director of research at Savills Singapore, made the following statement regarding the S$4,000 psf pricing expectation for the potential forward sale of Solitaire On Cecil: "In a period of great angst and uncertainty on multiple fronts, yields may not matter that much to some investors who may wish to have peace of mind by switching their asset holdings into freehold real estate in a safe-haven."

The most money ever paid for an entire office building in Singapore was S$3,721 per square foot (psf) of existing NLA. This was for the sale of the freehold Robinson Point by Tuan Sing to Viva Land, which brought in a total of S$500 million. The contract was signed in 2020, and the transaction was finalised the following year in 2021. However, many who keep an eye on the market have hypothesised that the record price undoubtedly took into account the property's potential for redevelopment. This year, Viva Land also bought the SO/ Singapore hotel that is located next door; there is potential to revitalise both of these buildings by taking use of the URA's CBD Incentive Scheme.

For a more recent example of a reasonably large sized office space with a similar tenure in the CBD, observers point to the 8th floor of Samsung Hub, which has a strata area of about 13,111 square feet; this was transacted in July of this year at a price of S$4,050 per square foot, which amounts to nearly S$53.1 million, according to the data provided by URA Realis caveats. This price per square foot remains the highest for a whole-floor transaction in the 999-year leasehold building, matching the price that was paid for Level 9 the previous year.

The Samsung Hub is one of the relatively few buildings in Singapore's Central Business District (CBD) that provides investors with the opportunity to participate in a strata office play. Office space may be found on levels 8 through 30, including the penthouse, in the building on Church Street that was granted a temporary occupation permit in November of 2005.

The price per square foot for Level 31 in Suntec Tower 2 was S$3,350.

In a separate transaction, the strata area of about 12,282 square feet on the 31st level of Suntec Tower 2 is being sold for S$41.15 million, which is equivalent to S$3,350 per square foot. This price per square foot for an entire floor in the tower establishes a new record, surpassing the previous record of approximately S$3,300 psf, which was paid in June by a Singapore permanent resident (PR) of Chinese descent for the 30th floor of the same tower, which had a strata area of 11,743.52 square feet.

In the most recent transaction, the 31st floor of the building was sold to a company whose shareholders are either citizens of China or Cambodia; none of them are Singapore permanent residents. The company is controlled by a company that is owned by Arcc Holdings boss Tony Chen and a member of his family.

Suntec Tower 2 is situated on land that has about 65.5 more years remaining on its lease, and it has a total of 44 floors.