CapitaLand Fund Buying Office Tower Near Singapore’s Tanjong Pagar for S$200M

Singapore’s office market showed signs of life today as a listed company controlled by the family of Indonesian billionaire Tahir is selling an office tower for S$200 million ($145.6 million), according to an announcement to the stock exchange.

MYP Ltd, a Singapore-listed holding company controlled by the son of Mayapada Group chairman Tahir has signed an agreement to sell the ABI Plaza, a 12-storey commercial tower southwest of the Tanjong Pagar MRT station, to Artemis Ventures, it said in the bourse announcement, with the private vehicle controlled by an unlisted fund managed by CapitaLand.

The freehold tower is eligible for redevelopment under incentive schemes introduced by the Singapore government last year, with market analysts seeing the deal as a sign that plans to rejuvenate the commercial market south of Raffles Place continue to attract investors with that appeal having been enhanced by recent government measures.

“As demonstrated by this transaction, there remains continued appetite for freehold opportunities especially those benefiting from the revitalisation of the Shenton Way sub-market through the CBD incentive scheme,” Ting Lim, JLL’s head of capital markets in Singapore told Mingtiandi.

Closing the Deal in the Covid Year

ABI Plaza’s location at the intersection of Tanjong Pagar Road and Keppel Road puts it just inside the Keppel Viaduct toll highway that separates Singapore’s core business area from the precinct surrounding the container port, which is slated for renewal in the next five years. The site is also located close to the planned Prince Edward Road MRT station on the Circle Line.

At the announced compensation the CapitaLand fund is paying the equivalent of S$2,162 per square foot of net lettable area in the 1994-vintage building, which provides 92,510 square feet (8,594 square feet) of office accommodation.

First reported to be on the market in June of this year, the property is said to be 99 percent occupied, with rents currently averaging S$5.6 per square foot per month. Media accounts in the middle of this month indicated that the CapitaLand fund had already locked into exclusive talks to acquire the property.

With Singapore rapidly developing the Tuas Port project, ABI Plaza sits just across the road from what will soon be part of the city’s Greater Southern Waterfront project, a scheme to convert the area around the current container port into a residential and recreational area that will add 9,000 new homes along with a new waterfront park.

Redevelopment Potential

Even before that redevelopment project kicks in, ABI Plaza holds some bonus value under the CBD Incentive Scheme (CIS) introduced by Singapore’s Urban Redevelopment Authority last year to encourage development of residential space in the city’s commercial core.

Should the new owner redevelop the project, which occupies a 20,338 square foot site, into a project composed of at least 60 percent residential space, it would be granted a higher plot ratio that would allow for development of up to 25 percent more space, or 30 percent more space if the project is all residential apart from commercial space on the first floor.

While the incentives would allow for significant expansion, the buyer has no immediate plans to redevelop the property, according to JLL, which represented the seller in the transaction.

Indonesian Tycoon Cashes Out

MYP, which is chaired by Jonathan Tahir, son of businessman Ang Tjoen Ming (commonly known as Tahir), is selling ABI Plaza for around S$34.2 million more than it paid to acquire the property in a series of transactions closing in 2016.

While it managed to achieve a mark up over that original S$165.8 million purchase price, the disposal still comes in at 23 percent below a March 2020 valuation which appraised the property at S$260.1 million.

In a statement, MYP Ltd said that the disposal is in line with its efforts to maintain a strong balance sheet and indicated that the advent of the Covid-19 pandemic might make this an appropriate interval to look for more lucrative investment opportunities.

The transaction is expected to close within four weeks of the deal signing.