www.shaproperty.com

THE race for SIA Building at Robinson Road is hotting up with the price said to have crossed $1,100 per square foot (psf) of net lettable area (NLA), or $325 million, sources say.

At these levels, the net yield is understood to be under 4 per cent based on the property's current rental stream.

But with the recovery in the office sector, bidders are clearly looking at the growth story. What the final price for 35-storey SIA Building will be remains to be seen, depending in part on how terms are negotiated, say industry observers.

Property market watchers tipped a CLSA fund as a strong contender for SIA Building. Others contesting for the property include the real-estate arm of Deutsche Bank, DB Real Estate, and a Goldman Sachs fund.

CLSA Merchant Bankers recently completed its purchase of the freehold HB Robinson on Robinson Road from Ho Bee for $80 million or about $870 psf of NLA, reflecting a gross yield of 2-plus per cent. A Goldman Sachs fund last year bought DBS Towers 1 and 2 in Shenton Way for $690 million.

CB Richard Ellis, which is handling the sale of SIA Building, declined to confirm the identity of the frontrunner or the price when contacted by BT yesterday.

An initial expressions of interest for the property - which stands on a site with a remaining lease of 87 years - closed in late April with 13 offers from local and foreign institutional investors.

Of these, seven were shortlisted and invited to take part in a private tender that closed on June 15.

The parties that have looked at the building at various stages of the bidding process are said to have included international names like GE Capital, Lehman Brothers and ING Real Estate Investment Management representing Germany's Difa Deutsche Immobilien Fonds, which specialises in managing open-ended real estate funds.

Others include a property fund managed by Keppel Land's Alpha Investment Partners as well as Real Estate Investment Trusts listed on Singapore Exchange, including CapitaCommercial Trust, Suntec Reit and Macquarie MEAG Prime Reit.

However, with the stock market rout that has sent up yields on Reits, the local Reits may have had to drop out of the race, property market watchers suggest.

SIA Building, completed nine years ago, has a total NLA of 295,640 sq ft. It is almost fully let.

Tenants include Rabobank, Royal & Sun Alliance Insurance and tyre maker Michelin.

Ground-floor tenants include OCBC and Stanchart. SIA itself occupies a couple of floors for the sales offices of Singapore Airlines and Silk Air.

The building has 31 floors of office space, some retail space and about 180 carparking spaces.