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THE regeneration of the Central Business District (CBD) is gaining pace, with another major building being refurbished.

Future look: Artist's impression of the 30-year-old International Plaza after its refurbishment

The 30-year-old International Plaza will have a $15 million makeover, with the cost coming from its sinking fund.

Colin Tan, head of research at Chesterton International, the property managers for International Plaza, believes the refurbishment will bring a range of benefits.

'The rentals for office and retail for High Street Centre were about 5-10 per cent higher after the upgrading. So I would expect about the same for International Plaza,' he said.

High Street Centre was refurbished in 2005 at a cost of about $10 million.

Decisions on refurbishing strata-titled buildings in the CBD, like International Plaza and High Street Centre, are hampered by a need for a consensus among the many owners.

More common these days is the complete redevelopment of old buildings with single owners, such as Natwest Centre and No 1 Shenton Way.

Mr Tan, noting that the collective en bloc sale of strata-titled commercial buildings is difficult, said: 'In most older residential developments, a substantial number of units are fully paid. The rest have smaller outstanding loan amounts. When commercial units are involved, their owners often pledge or re-finance their units in return for commercial loans needed for expansion or for the daily operating costs of their businesses.'

The overall office rental index for all areas may have increased by 6.5 per cent quarter on quarter in 2Q06 but some believe this might have an adverse effect on the pace of the CBD's revamp.

Nicholas Mak, director of research and consultancy at Knight Frank, says: 'With rents going up, owners are less likely to make changes as this will mean disrupting existing tenants' business.'

Office rents at older buildings like International Plaza outside the prime Raffles Place area are between $3.50 and $4 per square foot (psf) per month. Newer buildings outside the prime area can fetch higher rents - the recently redeveloped Parakou Building on Robinson Road is seeking $4-$5 psf per month. Yet, the prospect of better rents has not sparked a wave of change in the CBD. 'There need to be more incentives,' Mr Mak said.

International Plaza, which will have an elaborate LED facade, may be entitled to a new government cash incentive provided to developers for lighting up CBD buildings, which is capped at $500,000.

In some areas, revised plot ratios have had an impact on the number of residential collective en bloc sales.

However, buildings like International Plaza are already built up to their maximum gross floor area (GFA).

Anson House, which has just been put up for sale by tender, is also built to its maximum GFA, although the office spaces can be reconfigured to provide more lettable area.

Anson House is marketed by Savills Singapore, whose director of investment sales, Steven Ming, said: 'The investment potential for Anson House is from its rental yield.'

That Anson House is fully leased does bode well for the office market outside of Raffles Place, and some investors are beginning to take notice. Allco Commercial Real Estate Investment Trust (Allco Reit) recently bought a redeveloped office building at 55 Market Street for $72.5 million. It also owns China Square Central.

Investors like Allco Reit will determine the future of the older CBD. Allco fund manager Nick McGrath says the rents at 55 Market Street are 15-30 per cent less than Raffles Place offices and it is 'perfect for smaller tenants who want a Raffles Place address but a rental which is less than what they would pay in the premium towers'.