S$910 million Far East Shopping Centre deal falls through after URA rejects redevelopment proposal

Apr 11, 2024

THE collective sale of Far East Shopping Centre is said to have fallen through, with Chinese businessman Du Shuanghua’s Bright Ruby Resources pulling out of the acquisition, worth about S$910 million.

The deal came undone as the buyer – Glory Property Developments, a company linked to Bright Ruby and Du – failed to get approval from the Urban Redevelopment Authority (URA) to extend the site’s gross floor area (GFA) in its proposed redevelopment, under the government’s Strategic Development Incentive (SDI) scheme.

The deal was subject to conditions including approval from URA for up to 20 per cent more GFA under the SDI scheme.

This request was rejected by URA on Jan 24.

Owners of the 999-year leasehold property along Orchard Road received a circular on Monday (Apr 8) notifying them that the collective sale has been rescinded. “In light of (this), the Collective Sale Committee is considering the next steps, and we will update on further developments relating to the collective sale as soon as practicable,” it said.

Glory Property submitted an application to URA on Dec 29, 2023, with a proposal to build a “new commercial and hotel development”.

In a written statement dated Jan 24 and published on the agency’s master planning platform, URA said: “The proposal cannot be supported as it constitutes only a single development site and thus does not fulfil the eligibility criteria for the SDI scheme.”

Since the deal was conditional on URA’s approval, among other things, Glory Property will avoid any forfeiture of its deposit.

Strategic Development Incentive scheme

The scheme was introduced in 2019 “to encourage selective rejuvenation of our CBD (Central Business District) and other strategic areas, where appropriate, to achieve positive transformation in these areas”, according to URA’s website.

Applications to redevelop existing developments in the Orchard Road, CBD and Marina Centre areas are encouraged. URA guidelines stated that the “redevelopment proposal should include a minimum of two adjacent sites, such that the amalgamated redevelopment can have a strong transformational impact on the surrounding environment that will enhance and rejuvenate the area”.

Approval for the SDI is also dependent on the specifics of each site, such as the urban and architectural design concepts, infrastructure capacity, and environmental contributions to surrounding areas.

In April 2022, URA reviewed and updated the conditions to include Green Mark certification, which requires buildings to attain certain sustainability standards.

In September 2023, Glory Property made an offer for Far East Shopping Centre. The offer was said to be around S$910 million, a notch below the guide price of S$928 million.

CBRE capital markets head Michael Tay, who brokered the collective sale, could not be reached for comments. The Business Times has also reached out to Bright Ruby for comments.

Under the SDI, the GFA of the Far East Shopping Centre site – which currently spans 36,014 square feet (sq ft) – could have increased by up to 20 per cent. This brings the site’s GFA from 242,145 sq ft to around 290,574 sq ft, equivalent to a plot ratio of 8.06.

This was on condition that the incoming buyer collaborates with owners of neighbouring properties to enhance the Orchard Road precinct.

Exemptions may be provided if the “redevelopment helps to plug critical gaps in the planned pedestrian networks for the precinct” or “if the redevelopment of a single site is large enough on its own to achieve the desired transformational impact”.

Built in 1974, Far East Shopping Centre comprises a five-storey retail podium, a 10-storey office block and a two-storey basement. Around 30 per cent of the property’s share value is still owned by Far East Organization, which developed it. In its vicinity are Bonvests’ Liat Towers and Wharf Estates Singapore’s Wheelock Place.

Far East Shopping Centre also stands next to a stretch of buildings owned by Ong Beng Seng’s Hotel Properties Ltd (HPL), which were bundled together in a redevelopment proposal approved by URA in August last year. These include the voco Orchard Singapore hotel, Forum The Shopping Mall and HPL House.

In HPL’s proposed plan, the three sites will be turned into a massive mixed-use redevelopment spanning 114,153.38 square metres.

It will include a hotel and residential units across two tower buildings as well as retail and office spaces, HPL said. The company also has plans for a six-storey podium with a rooftop garden, performance theatre and basement car park.

HPL hopes the redevelopment will be a “gateway destination on Orchard Road and provide connectivity between the site and neighbouring developments”.

This news comes amid a fairly quiet collective sale market.

The last commercial collective sale in the Orchard area was for the freehold Ming Arcade, which was sold for S$172 million in December 2022. The sale price worked out to S$3,125 per square foot per plot ratio (psf ppr), making for a record-high land rate in the market.

Another notable transaction was for the freehold Tanglin Shopping Centre, which was sold for S$868 million or S$2,769 psf ppr in February 2022.

https://www.businesstimes.com.sg/pro...pment-proposal