Orchard Towers Owners Said Ready to Set $1.2B Price on Singapore Commercial Project

The proposed collective sale of one of Singapore’s most infamous centres of sin is ready to take a step forward with owners of units in Orchard Towers reportedly set to vote on a recommended reserve price of S$1.6 billion ($1.2 billion) for the complex on Orchard Road.

Owners in the freehold development located where the famed shopping strip intersects Claymore Road will vote on pricing and the apportionment of sale proceeds at an extraordinary general meeting on 18 February, according to an account in the Business Times.

“It is still extremely rare for freehold commercial zoned sites to be available in Orchard Road area, especially those with wide frontage on Orchard Road,” said Galven Tan, deputy managing director for investment sales and capital markets at Savills Singapore. “Investors remain very keen on such sites as the commercial zoning allows investors the flexibility of developing mixed use developments without the constraints of ABSD regime.”

Should the owners of the combined residential and commercial complex find a buyer willing to meet their asking price, the sale of the building known colloquially as “the four floors” would be Singapore’s most biggest ticket collective transaction ever, surpassing CapitaLand’s 2007 S$1.34 billion purchase of Farrer Court in District 10, despite cooling measures put in place in December which have dampened developer demand.

Rare Opportunity In Orchard Road

Built in 1975, the 18-storey tower houses 58 freehold condominium units and five floors of commercial space on a 3,441 square metre (37,040 square foot) site in District 9. Should the owners achieve their proposed asking price, the project, which has a maximum plot ratio of 4.9, would be fetching S$8,817 per square foot for its current 16,859 square metres of gross floor area.

Residential units in the back section of the complex, which occupies a plot zoned for both commercial and residential use, currently trade for an average of S$1,295 to S$1,345 per square foot, based on data from property website EdgeProp. A separate streetfront plot occupied by the current complex is zoned for commercial use.

Looking past its current identity as an entertainment complex, the building is located in a prime shopping area next door to the Palais Renaissance shopping centre and opposite the Forum Mall within a 10 minute walk of Tanglin Shopping Centre and Orchard MRT.

In August of last year, Orchard Towers owners appointed Edmund Tie as the marketing agent for the proposed en bloc sale. However, the property firm can only begin marketing the tender once 80 percent of the owners agree on the proposal.

In 2007 the building’s owners had considered an earlier collective sale proposal, according to local news reports, however, no record of a formal tender process ever emerged.

Tax Avoidance

While the general en bloc market has taken a hit from the higher additional buyer’s stamp duty (ABSD) introduced in December, Savills’ Tan says the new measures will have limited impact on the Orchard Towers proposal, as the market restrictions apply only to residential property, with much of the project site zoned for commercial use.

Edmund Tie declined to comment. Mingtiandi.com reached out to Legal Solutions, which has been appointed as legal advisor to the owners, but had not received a response by the time of publication.

While owners of Orchard Towers units prepare to vote on terms for their potential payday, residents in the High Point residential complex just over a kilometre (0.6 miles) away may still be recovering from a setback suffered when Singapore announced the additional stamp duty and tighter lending conditions.

After the cooling measures were imposed in mid-December, Hong Kong builder Shun Tak Holdings, forfeited its S$556.7 million deal to purchase the freehold project in District 9, making the condo complex the first casualty of the new rules.

Despite that apparent setback, analysts see ongoing homebuyer enthusiasm for Singapore properties and the city’s strong fundamentals supporting further project purchases by developers.

“It is probably fair to say that the dust has not yet settled since the government’s latest measures. Developers are watching how the market response is to these measures,” Tan said.

“That said, developers generally are still looking to replenish their land bank, evident from the turnout at government land sale tenders, therefore sites that have strong attributes and reasonable pricing will continue to get the attention of developers,” he added.