CDL buys Delfi Orchard in en bloc deal for S$439 million

The group already owns over 80 per cent of Delfi Orchard’s units

May 28, 2024

CITY Developments Ltd (CDL) has bought over Delfi Orchard, a 40-year-old strata-titled building of which it already owns the majority share, for S$439 million. This was just a shade above the guide price of S$438 million when the site was launched for collective sale in mid-April.

The S$439 million price tag translates to a land rate of S$3,346 per square foot per plot ratio (psf ppr), marketing agent Savills Singapore said on Tuesday (May 28). This includes a land betterment charge and is based on the site’s existing gross floor area (GFA) of 131,186 square feet (sq ft).

CDL group chief executive officer Sherman Kwek said the group was “delighted” to acquire the “strategically important asset”.

“Having owned 84 per cent of the units already, this acquisition allows CDL to potentially unlock the full potential of this prime freehold asset,” said Kwek. “With several redevelopments anchoring the planned transformation for this part of the Orchard Road precinct, this is an exciting opportunity for us to participate in the rejuvenation efforts.”

This includes the potential to tap the government’s Strategic Development Incentive (SDI) Scheme, which CDL may explore in the near future, the group said. The scheme encourages the redevelopment of older buildings in strategic areas such as Orchard Road, in line with the broader planning intentions to rejuvenate these areas.

Under the SDI Scheme, the development’s GFA may be increased by up to 20 per cent if the building owner ties up with neighbouring buildings to do a joint revamp.

CDL already owns several properties next to Delfi Orchard – the Orchard Hotel and Claymore Connect – and Palais Renaissance nearby. In between Delfi Orchard and Palais Renaissance sits the strata-titled Orchard Towers, where owners attempted to pull together a collective sale, but did not get it off the ground.

CDL also holds a stake in the St Regis Singapore in the area, as well as The Singapore Edition hotel and Boulevard 88 condo along Cuscaden Road.

Delfi Orchard sits on a 20,264 sq ft site along Orchard Road zoned for commercial use, with height control of up to 20 storeys. The 11-storey development comprises 150 strata-titled units (127 shops and 23 apartments), of which 126 are owned by CDL.

According to earlier reports by The Business Times, owners of the 23 apartments stand to pocket between S$2.2 million and S$4.6 million each. Commercial unit owners stand to get about S$984,000 to S$24 million for each unit.

CDL’s past annual report indicated that it bought 118 units at Delfi Orchard in 1991. The properties were reported to have been acquired for S$95 million from Japanese developer Yamasin.

The group went on to buy Palais Renaissance next door from the same developer in 1993, for S$115 million. It completed a S$7 million asset enhancement of the building in 2022.

This sale of Delfi Orchard is the first successful en bloc deal done in the area since December 2022, when freehold commercial complex Ming Arcade was sold for S$172 million. The sale price translated to S$3,125 psf ppr, marking a record-high land rate in the market.

Earlier this month, owners of Far East Shopping Centre received an offer under S$880 million, after an earlier deal to acquire the building for around S$910 million came undone. An extraordinary general meeting has been called for the building’s owners to sign a supplementary agreement to lower the price on the collective sale.

Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore, said: “Developers continue to be drawn to prime development opportunities here, and are very excited by the URA’s plans to rejuvenate and refresh Orchard Road.”

Along the same stretch of Orchard Road are buildings owned by Ong Beng Seng’s Hotel Properties, which were bundled together in a redevelopment proposal approved by the URA in August last year. These include the voco Orchard Singapore hotel, Forum The Shopping Mall and HPL House.

https://www.businesstimes.com.sg/pro...l-s439-million