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THE first collective sale of a shopping centre in the Orchard Road area may be in the offing, as majority owners of Ming Arcade on Cuscaden Road are close to agreeing to such a sale.

Ming Arcade: Owners could get $600,000 per unit, about 150% more than selling the units individually

This will be the first shopping centre in the area to go for collective sale and could blaze the trail for strata commercial buildings in Singapore's prime shopping belt.

'Collective sales of ageing strata commercial buildings in the Orchard Road area would speed up their redevelopment, in tandem with efforts underway for the overall remaking of Orchard Road,' says Jones Lang LaSalle regional director and head of investments Lui Seng Fatt.

The freehold Ming Arcade was completed in the 1980s by the late Ho Kok Cheong, who developed People's Park Complex.

Jones Lang LaSalle (JLL), which is handling the collective sale of the property through an expression of interest exercise, says it is nearing a deal with owners controlling the requisite 80 per cent of share values for a collective sale.

The expected price is said to be between $55 million and $60 million, which works out to $1,079 to $1,177 per square foot of potential gross floor area. No development charge is payable.

Based on the lower end of the price expectation, the break-even cost for a new office building could be about $1,800 to $1,900 psf, assuming 80 per cent efficiency (ratio of net lettable to gross floor area). Assuming a retail development, the break-even could be higher at around $2,200 to $2,300 psf assuming 70 per cent efficiency and higher construction costs, analysts estimate.

The 12,132 sq ft freehold site is zoned for commercial use with a 4.2 plot ratio (ratio of potential gross floor area to land area) and a maximum height of 20 storeys, according to JLL.

'This makes it an ideal potential for several redevelopment options such as a prime small office, home office (Soho) development, corporate headquarters building, a high-end boutique, retail or mixed development, all having one of Singapore's most prestigious addresses,' JLL says.

Part of the new development could also be used for medical suites, given strong demand for such properties, Mr Lui reckons.

The existing Ming Arcade comprises a seven-storey commercial development and three basement levels, with a total of 88 units adding up to 34,951 sq ft net lettable area. Owners stand to receive about $600,000 per unit on average, which is about 150 per cent more than what the units would fetch if they were sold individually.

According to earlier media reports, Hotel Properties Ltd (HPL) owns five shop units at Ming Arcade. The listed hotel and property group has a sizeable presence in the area. It owns HPL House, Four Seasons Hotel and Hilton Hotel and has a stake in Forum. Earlier this year, HPL bought the Beverly Mai site at Tomlinson Road through a collective sale. It paid $238 million, reflecting $1,184 per sq ft per plot ratio inclusive of an estimated development charge of $16.8 million.

Market watchers reckon other ageing strata commercial properties in the Orchard Road belt that could potentially follow in the footsteps of Ming Arcade and hit the en bloc trail include Far East Plaza, Far East Shopping Centre and Delphi Orchard.