Singapore’s real estate landscape has witnessed another significant transaction as Shenton House, nestled in the heart of the Central Business District (CBD), has been sold en bloc for S$538 million.
This en bloc sale, expertly facilitated by JLL, the sole marketing agent, marks the property’s third attempt at a public tender, with the deal closing on November 1st.
The buyer, Shenton 101 Pte Ltd, is a private entity owned by Lee Yeow Seng, the Group Chief Executive Officer of IOI Properties Group (IOIPG), a notable name listed on Bursa Malaysia Securities.
Lee Yeow Seng opted for a personal acquisition through Shenton 101 Pte Ltd., citing the acquisition’s scale and the collective sales committee’s tight timeline as pivotal reasons.
This strategic move is not just a personal venture for Lee but a complementary addition to IOIPG’s already significant presence in the Marina Bay area, highlighted by notable projects like IOI Central Boulevard Towers, W Marina Bay, and Marina View Residences.
The acquisition and planned redevelopment of Shenton House align perfectly with IOIPG’s existing investments, enhancing its footprint in the Marina Bay vicinity.
Shenton House’s Redevelopment Potential
Shenton House, a commercial landmark with a rich history dating back to the 1970s, stands on leasehold land spanning 36,250 sq ft along the prominent Shenton Way.
Its potential for redevelopment is amplified by the CBD Incentive Scheme (CBDIS), which allows a 25% bonus on gross floor area (GFA), translating to a gross plot ratio of 14.
This opens up possibilities for a mixed-use commercial space featuring luxury residential units or a hotel, thereby rejuvenating the CBD core with modern, low-carbon office spaces and upscale residential rentals.
A Vision for Prime Offices and Luxury Residences
Lee Yeow Seng’s vision for the site is ambitious. He plans to transform the over half-million-square-foot GFA of Shenton House into a prime Grade A office space coupled with luxury-branded serviced residences.
This reflects his steadfast confidence in Singapore’s prime office sector and the residential rental market, a sentiment that resonates with Singapore’s stature as a leading financial and business hub in Asia.
Financial Aspects and Conditions of the Sale
The sale, initiated at a reserve price of S$538 million, below the earlier reserve of S$590 million, reflects a land rate of about S$1,889 per square foot per plot ratio (psf ppr), considering the costs for land betterment charge and lease top-up premium to a fresh 99-year lease.
Taking into account an allocation of 60 percent for commercial use and 40 percent for residential use in the mixed-use project under the CBDIS, the total effective cost of acquisition is estimated to approach the S$960 million mark for the proposed development.
The acquisition is subject to a statutory five-day cooling-off period and is contingent on approval from the Strata Titles Boards or the Court.
A Prime Redevelopment Opportunity
Shenton House stands as the last remaining redevelopment opportunity on the Shenton Way stretch, as a statement by Tan Hong Boon, JLL’s Executive Director of Capital Markets, further accentuates.
The envisaged development aims to bridge the gap in the demand for quality office spaces and luxury rental housing in the area, contributing significantly to the ongoing rejuvenation of Shenton Way.
Reflecting Confidence in Singapore’s Real Estate Market
The successful en bloc sale of Shenton House follows in the footsteps of other notable transactions like the Far East Shopping Centre, reflecting a burgeoning confidence among commercial property owners in Singapore’s real estate market.
As developers and investors like Lee Yeow Seng of IOI Properties Group continue to recognize and capitalize on Singapore’s robust fundamentals, the nation’s skyline is set for a transformative trajectory, heralding a new era of urban redevelopment and architectural excellence.