ONE of the few freehold residential projects to be built in Singapore's city centre is now on the drawing
board thanks to an unusual property deal.
The project will be constructed in Tanjong Pagar, where Keppel Towers and GE Tower now stand, and is
the result of a rare swop of properties between two companies.
K-Reit Asia, the real estate investment trust that owns Keppel Towers and GE Tower, is selling the two
freehold office buildings to Keppel Land for $573 million.
In return, Keppel Land will sell its one-third stake in Phase One of Marina Bay Financial Centre (MBFC)
to K-Reit Asia for just over $1.4 billion. Keppel will reap a net gain of about $321 million from selling
the asset.
Based on these prices, the values of the properties work out to be $2,450 per sq ft (psf) for MBFC, and
$1,201 psf for the total potential floor area of Keppel Towers and GE Tower.
Keppel plans to redevelop the office buildings in Hoe Chiang Road diagonally opposite Amara Singapore
hotel into a high-rise condominium with shops and restaurants on the first floor. It will comprise two
towers of 620 apartments in all.
The developer has already obtained outline planning permission from the Urban Redevelopment
Authority to redevelop the site with a plot ratio of 5.6 and a total gross floor area of 481,800 sq ft.
At a joint press conference yesterday, senior executives of both companies described the deal as a
'win-win' situation.
It is a chance for Keppel Land to acquire a freehold residential site in an area that will undergo major
redevelopment in the coming years, with the relocation of ports and the Malaysian railway station.
'The site is well-positioned to ride on the growing popularity of city living,' said its chief financial officer
Lim Kei Hin.
Property consultants told The Straits Times they expect strong demand for the new freehold
condominium.
'There are hardly any freehold residential properties downtown, and the site is well-located between the
financial district and the HarbourFront area,' said Ms Tay Huey Ying, director of research and advisory
at Colliers International.
Going by the break-even price and values of other condominiums in the area, the new project could
fetch prices above $2,000 psf, said Cushman & Wakefield managing director Donald Han.
He also noted that the asset swop reflects the 'symbiotic relationship' between Keppel and K-Reit,
which provides a steady stream of properties to each company, helping them get around the difficulty
of acquiring new and desirable assets on the open market.
Keppel's Mr Lim said yesterday that divesting the MBFC stake allows his firm to unlock the value of that
investment and help in the growth of K-Reit Asia, of which Keppel has a 40 per cent stake.
The chief executive of K-Reit Asia Management Ng Hsueh Ling said she had approached Keppel to
suggest the deal, as Keppel Towers and GE Tower were getting old and required increasingly expensive
maintenance. Keppel Towers is 19 years old while GE Tower is 17 years old.
After the asset swop goes through, 90 per cent of K-Reit Asia's portfolio will be in the prime Marina Bay
and Raffles Place areas, up from 60 per cent previously, said Ms Ng.
The 99-year leasehold MBFC consists of two office towers that are fully leased to tenants, including
Standard Chartered Bank and Barclays, as well as the underground Marina Bay Link Mall, which is
about 87 per cent leased.
** above information from Straits Times
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