Published March 9, 2007

Marina Bayfront office block to turn into homes?

Owner may want to cash in on demand for city dwelling


(SINGAPORE) Could Marina Bayfront office block, currently occupied by Merrill Lynch at Marina Square, make way for apartments boasting views of The Esplanade and Marina Bay?

Not efficient now: High-rise apartments on the site can deliver higher values, says a property consultant

Industry sources say that the issue is being mooted by some quarters in Marina Centre Holdings Pte Ltd (MCH). Any change of use will, of course, have to be approved by the planning authorities.

MCH is a 53 per cent subsidiary of mainboard-listed Singapore Land, the property arm of United Industrial Corporation. In addition, UOL Group owns about 21 per cent of MCH.

When contacted, an MCH spokesman said 'we are not aware of any redevelopment study' on Marina Bayfront office tower.

However, market watchers say that it would not be surprising if MCH's board is mulling the issue, given that several Central Business District office blocks are already headed that way - including Natwest Centre and 1 Shenton Way - cashing in on hot demand for apartments in the city.

'This trend of redeveloping offices into apartments raises pressure on MCH, like any office property owner in the CBD, to seriously explore the possibility of redeveloping its office property into apartments to extract greater value from the asset,' says a property analyst.

Agreeing with this view, a property consultant says: 'The Marina Bayfront office block isn't very efficient right now, because of its layout and it's only six storeys high. Probably the highest and best use for the site may be high-rise apartments, which can deliver higher values, compared with the existing office building.'

And the 15-year-old office block may face stiff competition when Marina Bay Financial Centre (MBFC) and other future office developments in the vicinity - such as the project on the former NCO Club on Beach Road - come up later, reckon office market watchers.

The first office block at MBFC is slated for completion in the first quarter of 2010. Merrill Lynch's lease at Marina Bayfront is also said to end that year, although the bank is believed to have a renewal option.

If Merrill Lynch decides to move to MBFC, this will ease any decision by MCH to redevelop Marina Bayfront at Marina Square, market watchers reckon. Also, redeveloping the property in 2010 could prove timely as it will take out some existing stock from the office market just as new projects are being completed, helping to ease an office glut that some consultants predict may develop in about four to five years' time.

Marina Bayfront office tower was completed in 1992 and is part of the Marina Square development - which also includes a shopping mall and three hotels. The entire site - which has a 99-year lease from 1980 - is zoned for hotel use with a 3.4 plot ratio (ratio of maximum gross floor area to land area) under Master Plan 2003.

However, given the site's proximity to a new MRT station under the Circle Line, MCH could make a case to the planning authority for the site - or at least the Marina Bayfront portion - to be given a higher plot ratio, say market watchers.

Marina Bayfront has a net lettable area of about 80,000 sq ft - all leased to Merrill Lynch. The bank houses its merchant and private bank offices at this location.

It currently also has offices at Millenia Tower and HarbourFront Centre, and will lease an entire six-storey office building being built in the HarbourFront Precinct. The new building will have about 200,000 sq ft net lettable area when completed in the fourth quarter next year and will house Merrill's global support centre for its private banking and global markets businesses. It will also be Merrill's third IT and operations hub worldwide. Merrill Lynch HarbourFront is being developed by Mapletree Investments.