Sale of $1.9B Tanjong Pagar Tower Attempted as Singapore Heats Up

Owners of a strata-title office tower in Singapore’s Tanjong Pagar area have agreed to put their 50-storey property on the market in a move that could lead to the city’s largest collective sale ever and provide the latest sign of renewing investor activity in Southeast Asia’s priciest real estate location.

Holders of 800 of the 962 units at the International Plaza building on Anson Road have engaged property consultancy Edmund Tie to market the 45-year-old commercial block to potential investors, moving the sale effort beyond the 80 percent threshold necessary under Singapore’s collective sale law. With the local market having rebounded in recent months, representatives of the owners are predicting high demand for the core downtown site.

“Given our prime location within the CBD, we are expecting keen interest from local and foreign developers and funds,” Kevin Liang, chairman of the International Plaza collective sale committee, said in a Wednesday press release. “We look forward to making history.”

The owners have not made public their asking price for the property. But a report in the Straits Times in 2018, a previous peak of Singapore’s collective sale market, indicated that they were then asking S$2.6 billion (now $1.9 billion) for the property, which still has 48 years remaining on its 99-year leasehold.

The fresh attempt to market the ageing tower comes as the Lion City’s office sector attracts investors keen on acquisitions, according to Colliers International’s Asia Pacific Market Snapshot for the second quarter of 2021, and the city continues to see developers invest in redeveloping commercial properties in core locations.

Tower Tests the Market

Singapore property investment transactions totalled S$7.03 billion ($5.2 billion) in the second quarter, surging 86.3 percent from the previous period and setting the city-state on a path to reclaim its position as a safe haven for the region’s real estate investors, Colliers said. The property services firm predicted continuing interest from developers and investors into the second half as more people get vaccinated and the property market reopens further.

Completed in 1976, International Plaza’s 0.7 hectare (1.7 acre) commercial site at 10 Anson Road is within a minute’s walk of the Tanjong Pagar metro station and sits just across the street from the AXA Tower. In one of 2020’s landmark transactions, Alibaba purchased a 50 percent stake in the AXA Tower at a S$1.7 billion valuation, with plans to redevelop that 50-storey property. International Plaza is also just a few doors away from the Fuji Xerox tower, which City Developments Ltd is currently redeveloping as a 51-storey mixed-use project.

Currently covering a gross floor area of 1.44 million square feet (133,780 square metres) of built space, International Plaza’s lower nine floors house an eclectic mix of shops, with office units on the 10th to 36th floors that host the consulates of Malta and Tuvalu. The 37th to 50th floors are dedicated to residential apartments, and the building also has a swimming pool and car park.

Edmund Tie said the earlier collective sale exercise was disrupted when COVID-19 curbs were launched in 2020, with the building owners having since obtained an extension before relaunching their marketing last week.

Redevelopment Rage

The consultancy noted that the CBD Incentive Scheme introduced by the Urban Redevelopment Authority in March 2020 to encourage the conversion of older properties has hastened the transformation of the central business district into a live-work-play destination.

“The redevelopment of International Plaza is arguably the last piece in the jigsaw puzzle in the rejuvenation of the Tanjong Pagar precinct,” said Swee Shou Fern, executive director of investment advisory at Edmund Tie. “We eagerly anticipate novel and interesting development concepts that will be brought to the table.”

The recent policy moves aimed at rebooting Singapore’s urban core persuaded a pair of local firms to team with a Hong Kong-listed construction outfit to pursue and win a May tender for another mixed-use project in Tanjong Pagar.

SingHaiyi Group, controlled by mainland-born billionaire Gordon Tang and wife Celine, joined with Chip Eng Seng Corporation, which the Tangs also control, and an affiliate of Chuan Holdings in a joint bid for the purchase of the building known as Maxwell House at a price of S$276.8 million. Like International Plaza, Maxwell House is an ageing strata-title project within minutes’ walk of Tanjong Pagar station and holds redevelopment potential.

Trying to Get That Feeling

Collective sales in Singapore reached a fever pitch in 2018 with 36 deals totalling S$10.3 billion, up from 31 deals and S$8.5 billion in 2017. But the market cooled as the government applied higher stamp duties and tighter lending standards to avoid a property bubble.

Since that time, one of the largest attempts saw Sim Lim Square in the Rochor area put up for collective sale in 2019 at a reserve price of S$1.25 billion. Two tenders for the IT mall have failed.

More recently, a set of three-storey residential properties at 2, 4 and 6 Mount Emily Road changed hands for S$18 million in February, marking Singapore’s first collective sale of 2021 after the COVID crisis had aggravated market woes last year.