The office market continues to sizzle, with an expression of interest for Hitachi Tower at Collyer Quay said to have resulted in a top indicative bid

The office market continues to sizzle, with an expression of interest for Hitachi Tower at Collyer Quay said to have resulted in a top indicative bid of over $3,200 per sq ft based on existing net lettable area, sources say.

The figure is a record for office space, surpassing the figure of about $2,650 psf set earlier this year for 1 Finlayson Green.

Shortlisted bidders for the 999-year leasehold Hitachi Tower are now likely to conduct due diligence before finalising their offers, observers reckon.

Bids are believed to have been received mostly from overseas parties. The 37-storey building has about 280,000 sq ft net lettable area. So assuming a top bid of say $3,200 psf, the price would work out to around $900 million.

CapitaLand owns 50 per cent of Hitachi Tower and National University of Singapore the other half.

A similar exercise is said to be going on for Chevron House next door, which is believed to have attracted a top bid of about $2,800 psf.

The 99-year leasehold Chevron House - formerly known as Caltex House - is owned by CapitaLand (50 per cent), IP Property Fund Asia (25 per cent) and NTUC Income Insurance Co-operative (25 per cent).

The former Pidemco, now part of Capitaland, bought the two buildings from entities linked to Ong Beng Seng in 1999.

The spread in top bids between Chevron House and Hitachi Tower is due to the difference in tenure and the orientation of the properties. Also, some leases at Chevron House are believed to have caps on rental increases, which limits the ability of the building’s owner to take advantage of booming office rentals.

More office blocks continue to be offered for sale. Colliers International yesterday launched a tender for The Globe at Cecil Street, with an indicative price of $100 million.

The property, being offered for sale by owner Prosper Realty, is being pitched for its redevelopment potential. The $100 million price tag reflects a unit land price of $1,178 psf of potential gross floor area, including two payments the buyer will have to make to the state - an estimated $12.5 million differential premium to build a bigger project on the site and a premium of $9.6 million to top up the 9,080 sq ft site’s lease to 99 years from the remaining 75 years.

Under Master Plan 2003, the site is zoned for commercial use with an 11.2-plus plot ratio. Colliers says the successful buyer can apply for additional gross floor area (GFA) of up to 2 per cent. This will boost the plot ratio to around 11.42, allowing a 30-storey office block with 103,694 sq ft of GFA.

Colliers has also been marketing Keck Seng Tower in Cecil Street. The tender closed last week, attracting three bids above $200 million or $1,700 psf based on the existing net lettable area. The property is on a 17,322 sq ft site with a lease balance of 72 years.

Yesterday Colliers launched a tender exercise for Cassia View, a 20-storey freehold apartment block in Guillemard Road completed about eight years ago.

Owner Melody Development is offering the property - comprising 68 apartments and four penthouses - with vacant possession. The indicative pricing is $80 million or close to $900 psf based on the total strata floor area of 89,361 sq ft. ‘The buyer could refurbish the property into a serviced residence or hostel. The location is popular among expats and travellers looking for affordable accommodation,’ Colliers executive director (investment sales) Ho Eng Joo says. The tenders for Cassia View and The Globe close on Sept 12.

Source : Business Times - 15 Aug 2007