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News Release

Singapore

Maiden Collective Sale Launch of Thong Sia Building in Singapore

Rare opportunity to own a freehold commercial and residential building in Orchard Road


​​​SINGAPORE, 10 December 2014Thong Sia Building, a 26-storey building located along Bideford Road, directly opposite The Paragon, is being offered for sale by tender by sole marketing agent, Jones Lang LaSalle Property Consultants Pte Ltd ("JLL"). Built in 1981, this is the first time the entire building has been put up for sale. More than 80 per cent of the owners, measured both by share value as well as strata floor area, have consented to the collective sale. 

Thong Sia Building has a land area of approximately 21,602 square feet, and currently comprises seven levels of commercial space and a 19-level residential tower of 37 apartments. While Thong Sia Building is zoned 'Commercial and Residential' with a designated Gross Plot Ratio (GPR) of 4.9+ under the 2014 Master Plan, the Urban Redevelopment Authority (URA) has verified the existing Gross Floor Area (GFA) of the building to be in the region of 156,300 square feet, reflecting an equivalent GPR of about 7.236.

The vendors are expecting offers in the region of $400 million and $420 million, which translate to a rate of approximately $2,559 to $2,687 per square feet (psf) over the existing GFA. If the government allows the sale of an adjoining road that just serves Thong Sia Building, the purchaser's costs could go down to $2,414 to $2,532 psf.

"Singapore's Orchard Road is world renowned, and in the top league alongside London's Bond Street, Paris' Champ Elysees and Tokyo's Ginza. Property ownership in this district, especially freehold, is a matter of great prestige, privilege and value," said Mr Karamjit Singh, International Director at JLL.

He added: "Orchard Road is a relatively short stretch which spans about 2.4 kilometres, starting from the junction of Delfi Orchard, right up to Dhoby Ghaut. Based on a study carried out by JLL, there are only 50 non-residential buildings (i.e. hotels, commercial and mixed-use developments) located directly on or off Orchard Road. Of these 50 buildings, 31 are freehold or 999-year leasehold; while the rest have 99-year leasehold tenures or less."

"Of the 31 freehold assets, 22 are large-scaled strata-titled developments such as Lucky Plaza and Orchard Towers, or buildings owned by REITs and long-term investors such as The Paragon and Shaw Centre. We take the view that the chances of these assets being offered for sale in the medium-term are low. This effectively leaves only nine or so potentially tradable freehold assets in and around Orchard Road," continued Mr Singh.

"Over the last 10 years, only three freehold, non-residential Orchard Road assets have changed hands. The Grand Park Orchard building, formerly known as Crown Prince Hotel, changed hands twice (in 2013 and 2005) while the other two complete-building transactions include Pacific Plaza (2005) and 268 Orchard Road (2004)."    

"From this perspective, it is clear that an opportunity to own the freehold Thong Sia Building is truly valuable," says Mr Singh.

Thong Sia Building is equipped with two basement car parks with 50 lots. If redeveloped, 40 per cent of the GFA may be used for commercial space, i.e. about 62,520 square feet, while the balance 60 per cent GFA (or 93,780 square feet) may be kept for residential use.  

Outlining the options available, Mr Singh said: "A purchaser could choose to refurbish the building, or have the whole property redeveloped.  With 100 per cent control over the asset, the purchaser is also free to change the name of the building, which is great for branding purposes."

"With a prominent 60-metre road frontage onto Bideford Road, the commercial podium could be reconfigured into smaller retail units and sold individually, or leased to luxury-brand retailers who require an Orchard Road presence. When the Grand Park Orchard building was transacted last year at $1.16 billion, its Knightsbridge retail podium was pegged to an average sale price in excess of $10,000 psf."

He continued: "The purchaser may also wish to explore incorporating a portion of medical suites within the commercial space to capitalize on the site's proximity to Mount Elizabeth Hospital, Gleneagles Hospital and Paragon Medical. There are very few opportunities to acquire medical suites at the freehold Gleneagles Medical Centre and Mount Elizabeth Medical Centre (which has a balance lease of 61 years), which explains the latest deals at record levels of $8,525 and $9,002 psf respectively."

"Just like there is no new supply of freehold brand-new medical suites in around Orchard Road, there is also no supply in the pipeline of any new office space in Orchard Road," said Mr Singh.

"Within the Residential component, a purchaser may wish to configure the residential units into small apartments of between 40 to 50 square metres or so, as we expect an island-wide shortage of one-bedroom or small two-bedroom units since URA's new guidelines took effect on 4 November 2012, which imposes an average size requirement of 70 square metres and 100 square metres for the whole island, except for Central Area. As a result, the supply of "shoe-boxes", as they are often referred to, would be significantly curtailed."

The Central Area encompasses city locations such as Orchard, the Central Business District, Marina Bay, Marina South, etc. Thong Sia Building is located with the Central Area. Typical 58 square metre units at Scotts Square, for example, were last transacted at between $3,684 to $4,453 psf.

"A purchaser who wishes to hold the building as a long-term investment may also explore a conversion of the residential wing to serviced apartments, which also falls within the 'Residential' zoning in the Master Plan," added Mr Singh.

​The tender exercise for Thong Sia Building closes on Wednesday, 28 January 2015 at 2.30 pm.

– ends –

 

Note to editors:

  1. High-resolution images of Thong Sia Building are available here and here.