Friday, September 15, 2006
[RealEdge] BT : Commercial properties look to be next wave of collective sales
| Published September 15, 2006  | |
| Commercial properties look to be next wave of collective sales
By UMA SHANKARI
(SINGAPORE) The next wave of collective sales could well come from commercial properties - strata-titled office buildings and shopping centres. BT understands that three office buildings in the Central Business District (CBD) could be headed for the en bloc route - UIC Building along Shenton Way, a smaller building on Cecil Street and Satnam House on High Street. And the ageing Upper Serangoon Shopping Centre, on Upper Serangoon Road, could also be put on the market soon, according to property consultancy Credo Real Estate which is marketing the project. Mainboard-listed United Industrial Corporation has been buying up strata units in the leasehold UIC Building over the past two years and is now said to own about 78 per cent of share values in the property. BT understands that property company UIC is exploring the possibility of carrying out a collective sale of the building, although no decision has been made. Sources say that potential tenants looking for space at UIC Building have been told that leases can only be signed up to June 2008, which is when vacant possession has to be given to the building for a sale. The 72,958 sq ft leasehold site is zoned for commercial use and can be redeveloped into a new 50-storey project with nearly 900,000 sq ft gross floor area (or 12.32 times the site area). Sources estimate this could be about 70 per cent more than what the existing 40-storey building offers. Market watchers suggest that UIC could get approval from the planning authorities for other uses - such as residential or a hotel. The property is on a site which has a remaining lease of about 62 years. Elsewhere, Upper Serangoon Shopping Centre is also gearing up for a collective sale - and it could become the second mall to do so, after Ming Arcade on Cuscaden Road. The mall has a plot size of 51,000 sq ft, and contains 164 shop units, as well as eight residential units and one office unit. Sources also told BT that Satnam House and another office building in the CBD are working towards an en-bloc sale. News that these four commercial sites could soon be courting buyers comes after last month's report that the first collective sale of a shopping centre in the Orchard Road area may be in the offing, as Ming Arcade was said to be close to nearing a deal with owners controlling a requisite 80 per cent of share value for a collective sale. Ming Arcade's announcement immediately led to speculation that other ageing strata-titled commercial properties in the Orchard Road belt and elsewhere could potentially follow suit. Now, with the hoped-for launches of the three office buildings in the CBD and Upper Serangoon Shopping Centre, it seems like owners of strata-titled commercial properties are also climbing onboard the en-bloc bandwagon. Real estate investment trusts (Reits), which are constantly on the lookout for opportunities to grow their portfolios, might form a ready pool of buyers for retail and office properties, market watchers said. But the number of commercial en-bloc transactions is likely to be much lower than the number of residential collective sales to date, they added. 'In terms of quantity, it will not be anything like residential, Launching a commercial site for an en-bloc sale is not as easy as launching a residential site. For starters, unit owners might disagree as to how the money is divided among them. 'The method of apportionment for commercial properties is still untested,' said Mr Lui. For example, when it comes to retail properties, factors such as the floor level, a shop's distance from an escalator and even its distance from the toilets might affect its value. Also, in every shopping centre, no matter how old, there will be profitable shops whose owners will not want to sell. 'A lot of them (unit owners) operate their own businesses,' said Mr Lui. 'It is their livelihood. They must get a really good offer to entice them - a good en-bloc premium.' |
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