Over 41% of strata office units released at 20 Cecil Street sold at an average price of $3,090 psf

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/ EdgeProp Singapore
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January 29, 2021 8:30 AM SGT
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SINGAPORE (EDGEPROP) - In just over 3½ months since mid-October last year, 11 strata-titled office units at 20 Cecil Street have been taken up for an aggregate of $43.1 million or an average of $3,090 psf. The asking price for the units is from $2,950 psf.
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The 28-storey office tower at 20 Cecil Street, one of the few Grade-A office towers with strata-titled office units for sale in the Raffles Place area (Photo: Savills Singapore)
The 28-storey office tower sits on a strategic cross-junction where Cecil Street meets Church Street. “There’s hardly any Grade-A quality office building with strata units for sale within Raffles Place,” says Navin Bafna, associate branch director at PropNex, joint marketing agents of the units with Savills Singapore.

Investors, business-occupiers

The buyers of the strata units at 20 Cecil Street are a mix of Singaporean and Asian high-net-worth business owners from China, Hong Kong, Indonesia, South Korea and Vietnam, some of whom purchased multiple units, adds Bafna.
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Units range in size from 570 sq ft to over 1,000 sq ft, although there are some units that have to be sold as a bundle of two or more units. There is therefore a good mix of investors and business-occupiers in the ratio of 60:40 respectively, says Yap Hui Yee, Savills Singapore’s director of investment sales and capital markets.
Based on the latest transacted rental rate of $9.60 psf per month at 20 Cecil Street in December, and the asking price for the units, Yap estimates that investors will be able to achieve gross rental yields in the 3.8% to 4.2% range. “This is more attractive than residential yields today,” she adds.
The building has had many identities over the years. Since September 2019, 20 Cecil Street has been owned by a private fund managed by CapitaLand. It had paid over $500 million ($2,320 psf) for Plaza Ventures, the holding company that owns the commercial tower located at 20 Cecil Street.
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Showsuite of strata-titled office units for sale, with sizes ranging from 570 sq ft to over 1,000 sq ft, with some adjoining units offered for sale as a bundle (Photo: Savills Singapore)

Name changes over the years

The previous owner, Hong Kong-listed Fullshare Holdings, a real estate developer based in Nanjing, China — chaired by Chinese billionaire Ji Changqun — in turn paid $725.2 million ($2,900 psf) for Plaza Ventures back in February 2017. It was Fullshare that had renamed the building PLUS.
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Prior to that, the tower was called GSH Plaza. It bore that name following the purchase by a consortium led by Singapore-listed GSH Corp, controlled by Singaporean businessman Sam Goi, for $550 million in 2014. The consortium was made up of GSH Corp (51% stake), together with Vibrant DB2 (35%) and Goi’s private investment vehicle, TYJ Group (14%). The consortium was called Plaza Ventures. The $550 million price tag in 2014 translated to $2,181 psf, based on the net lettable area of 252,000 sq ft then.
In its earlier incarnation, the building was known as Equity Plaza from 2003 to 2014. For much of the 1990s, it was the headquarters of the Stock Exchange of Singapore: first, it was named the Stock Exchange of Singapore from January 1994 to November 1999, and then Singapore Exchange from December 1999 to November 2001. When the Stock Exchange moved to its new headquarters at SGX Centre on Shenton Way, the building at 20 Cecil Street was renamed Equity Plaza.
The 99-year, leasehold building has a lease from 1989, hence there are 77 years left on the lease. The building was developed by Keppel Land and completed in 1992. It was jointly owned by Keppel Land and its fund management arm, Alpha Investment Partners (AIP), before it was sold in 2014.
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The lobby of 20 Cecil Street after a $100 million makeover by Plaza Ventures four years ago (Photo: Savills Singapore)

$100 million makeover

For much of the 22 years, when it was under the ownership of Keppel Land and AIP, the building bore a reddish brown façade. Following its acquisition by Plaza Ventures, the building underwent a $100 million refurbishment, which included retrofitting the interiors to be in line with contemporary Grade-A office towers. After the makeover, the building now has a new curved, blue glass cladding; a new lobby; and a driveway.
It was Plaza Ventures that sub-divided the offices on the third to 28th floors into 259 strata-titled units. The first two floors were carved up into 21 strata shops. GSH Corp sold some of the strata office units, and purchased the penthouse floors for its own use. DB2 purchased the entire portfolio of retail units on the first two levels of the building prior to the sale to Fullshare.
The 27 office units that were released for sale last October are located on the fourth, fifth, ninth and 17th floors. According to Savills’ Yap, there are only 56 strata office units for sale within the building. CapitaLand’s private fund intends to hold the other whole floor units for lease.
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One of the large office units for sale at 20 Cecil Street (Photo: Savills Singapore)

Limited supply

According to Bafna, there are less than a handful of Grade-A office buildings in the CBD-Raffles Place area with strata-titled units for sale. One of them is the 30-storey Samsung Hub, where the last transaction was for a whole floor unit of 13,100 sq ft on the 11th level. It changed hands for $49.78 million ($3,800 psf) in February 2020.
At the 30-storey Prudential Tower, located just across the road from 20 Cecil Street, the last transaction was for a 1,625 sq ft, 24th floor unit that was sold for $5.36 million ($3,299 psf) in November 2019, based on caveats lodged.
SBF Centre on Robinson Road also offers strata office units for sale. The latest transaction was for a 5,221 sq ft unit on the seventh floor that changed hands for $11.5 million ($2,200 psf) last November. Prior to that, a 753 sq ft unit on the 24th floor fetched $2.26 million ($2,998 psf). The 99-year leasehold, mixed-use commercial development was completed in 2016.
Following the second-phase reopening of the Singapore economy in June 2020, strata office sales volume increased 61.4% from 2Q2020 to 3Q2020. The q-o-q increase from 3Q2020 to 4Q2020 vaulted 183.1%, according to Savills Research & Consultancy.
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‘Attractive asset class’

“The strata-titled office market proved to be an attractive asset class, especially for projects located in prime Districts 1 and 2 which constituted 64.8% of the total transacted volume in 2020,” observes Savills’ Yap. According to Savills, capital values increased 2.6% y-o-y to $2,606 psf in 2020, after a 12.3% y-o-y jump from 2018 to 2019.
As of 3Q2020, the strata-titled office stock in the Central region stands at just 10.5 million sq ft, a mere 0.36% higher than the last 20-year average from 2000 to 2020 (see table).
Only 13% of the total CBD office stock are strata-titled projects, according to Savills. “The limited supply has been crimped further by a strata-subdivision restriction on commercial government land sale (GLS) sites in recent years,” Yap says. “Interest has been especially keen in the prime Districts 1 and 2 CBD areas.”
Strata-titled offices in the range of 500 to 1,000 sq ft are most sought-after as the absolute price is slightly below $1 million to $2.5 million. And such small units are rarely available, especially in Grade-A office buildings in the CBD Core, adds Yap.

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