Renewed interest in ageing mixed-use developments on Orchard Road

By Tan Chee Yuen / EdgeProp | August 25, 2017 12:30 PM SGT
The collective-sale fever has returned, and some investors are adopting a long-term position by buying units in ageing, freehold buildings in the prime Orchard Road belt. One building that has become a target of late is Orchard Towers. Completed in 1975, the mixed-use development has become a landmark on Orchard Road. Orchard Towers, which is freehold, comprises two buildings separated by Claymore Drive. Fronting Orchard Road is the 25-storey commercial building with five floors of retail and F&B, with offices on the upper floors. The 25-storey rear block contains five floors of retail/F&B and 58 apartments on the upper floors. The apartments are all identical in size — 1,970 sq ft, three-bedroom units.
At Orchard Towers, it is not just the apartments that are strata-titled, but the retail and office units as well as the carpark. The latest transaction of a retail unit at Orchard Towers was for a 334 sq ft unit on the third floor that changed hands for $1.05 million ($3,147 psf) in July, according to a caveat lodged then. The most recent office unit that changed hands was a 958 sq ft one that fetched $1.75 million ($1,827 psf).
The recent spate of collective sales — eight so far, with a total transaction value of about $3.5 billion — may have sparked the hopes of strata unit owners in buildings such as Orchard Towers. “They have periodically contemplated a collective sale,” says a property consultant who declined to be named. “However, the challenge of mounting a collective sale in a mixed-use development is that there are many owners with different interests."
This is further complicated by the share allotment, with a higher number of shares going to retail unit owners, followed by office unit owners and, lastly, residential unit owners. Some of the established retail/F&B businesses at Orchard Towers are doing well, and the owners may be less motivated to pursue a collective sale, according to the property consultant.
Lucky Plaza is another ageing mixed-use development that has been on the radar of investors. Sitting on Orchard Road, Lucky Plaza is flanked by Marriott Hotel and Tang Plaza on one side, and Tong Building on the other. The 30-storey, freehold commercial- cum-residential development was developed by Far East Organization and completed in 1981.