SINGAPORE (EDGEPROP) – This week, we look at condominium projects that have achieved new highs in terms of psf prices and those that have seen new lows. This is based on URA Realis data for the period of Aug 1 to 10. (See also: Resale at Ardmore Park yields $4.7 mil profit)

The highest transaction recorded on a psf basis was for a 2,885 sq ft, four-bedroom unit at Ardmore Park condominium in the exclusive Ardmore Park area in prime District 10. It is just off Draycott Park and Draycott Drive. In the vicinity are the Tanglin Club and American Club, as well as the prime Orchard Road shopping malls.

Photo: Samuel Isaac Chua/EdgeProp Singapore

The freehold unit on the 25th floor of Ardmore Park changed hands for $10.8 million, or $3,744 psf, on Aug 6, which is a new high for the luxury condominium project completed 20 years ago in 2001. Developed by Wheelock Properties, Ardmore Park Condo has three 30-storey towers. All the typical units in the development are four-bedroom, 2,885 sq ft units. Each tower has two duplex penthouses of 8,740 sq ft each. Even though Ardmore Park Condo was completed in 2001, and is therefore 20 years old today, it continues to be the bellwether for the luxury condominium market in the Ardmore Park enclave. (See: Discover insightful data of any Singapore condominium with our condo directory)

Another property that saw its highest psf price transaction is the 606-unit, Aspen Heights on River Valley Road in prime District 9. The 999-year leasehold condominium was developed by the former DBS Land (now CapitaLand) and comprises two Y-shaped 16-storey blocks. A 1,582 sq ft, four-bedroom unit on the 11th floor of one of the blocks changed hands for $3.31 million or $2,092 psf. Not only is the transacted price the highest to date, it is also the first within the development to have crossed the psychological $2,000 psf threshold.

Photo: Samuel Isaac Chua/EdgeProp Singapore

Aspen Heights is conveniently located near the Robertson Quay neighbourhood as well as Fort Canning Park, as well as a short drive to the CBD and Orchard Road. 

Dunearn 386, a freehold, boutique development by Roxy-Pacific Holdings, has just 35 units. The project is a low-rise, five-storey block along Dunearn Road in prime District 11. Since the project was launched in July 2019, 24 units have been sold, based on caveats lodged.

Photo: Roxy-Pacific Holdings

The one- and two-bedroom units, with sizes from 452 to 667 sq ft, were sold at prices ranging from $1.14 million ($2,524 psf) to $1.645 million ($2,465 psf). Meanwhile, four-bedroom units of 915 to 926 sq ft were sold at prices from $2.09 million ($2,284 psf) to $2.374 million ($2,565 psf).

The latest transactions in early August were for the 1,163 sq ft, five-bedroom units that fetched prices of around $2,44 million apiece or $2,101 psf. Because of the sizes of the units, which are the largest in the development, the psf prices have hit a new low.

Check out the latest listings near Ardmore Park, Aspen Heights, Dunearn 386

The developer acquired a residential development site in the Guillemard neighbourhood for $93 million (Photo: Cushman & Wakefield)

SINGAPORE (EDGEPROP) - Listed property and hospitality group Roxy-Pacific Holdings has reported revenue of $198.4 million for FY2020 ended December 2020, a 55% decrease from $444 million in FY2019.

The net loss attributable to equity-holders for FY2020 was $29.5 million, compared to a net profit of $30.3 million in FY2019. This was due to impairment of hotel assets and properties resulting from the global pandemic and additional tax expense for its divested investment in Hong Kong, which amounted to $34.6 million. The impairment charges were non-cash items. This did not affect the group’s cash flow from operations, which remained at $84.4 million in FY2020.

In FY2021, the group will focus on broadening recurring income streams, such as achieving and maintaining high occupancy rates in freehold commercial properties in Melbourne, Australia, and Auckland, New Zealand.

The property development segment reported revenue of $165.8 million in FY2020, lower than the $385.9 million reported in FY2019. This was mainly due to the absence of revenue recognition from The Navian, as well as The Hensley and West End Glebe (Sydney) where most of the units’ settlement occurred in 2019. Delays in construction due to Covid-19 also contributed to a lower recognition of revenue.

The gross profit for the property development segment was 77% lower at $17.4 million, while gross profit margin fell nine percentage points to 10% in FY2020, as there were lower profit margins for some projects in Singapore as well as unexpected project cost escalation for Octavia Killara, a 43-apartment project in Sydney.

“We have successfully launched all the sites in our land bank and will place priority on the sale and delivery of the units. We continue to be highly selective in land acquisition, with a focus on freehold sites in Singapore,” says Teo Hong Lim, executive chairman and CEO of Roxy-Pacific. The group has a total of 10 ongoing residential projects in Singapore.

In November last year, Roxy-Pacific acquired a freehold residential site at Jalan Molek and Guillemard Road for $93 million. It has an estimated total land area of 37,131 sq ft and is allowed for residential development with a plot ratio of 2.8.

In February this year, the group announced that it has entered into an agreement to acquire a 999-year leasehold residential site in Singapore, 10A and 10B Institution Hill, for $33.6 million. The group intends to amalgamate the site with another 999-year leasehold site at 11 Institution Hill after it exercises the Option To Purchase issued on Feb 1. The amalgamated site will have an estimated total land area of 14,300 sq ft with a total gross floor area of 40,040 sq ft for residential development.

In Australia, the group’s residential development projects, Octavia Killara and West End Glebe, have been fully sold.

The Covid-19 pandemic caused a severe disruption to global economic activity and tourism activity, which has challenged Roxy-Pacific’s hotel segment. Revenue from the hotel ownership segment fell 50% to $25.2 million in FY2020 from $50.4 million in FY2019.

Teo says that cost control measures have been put in place. “We continue to focus on training and implementing ideas to improve productivity, internal processes and operational efficiencies. All these efforts will prepare the hotels to benefit well when the travel market recovers post Covid-19,” he adds.

The group’s flagship Grand Mercure Singapore Roxy is currently providing their entire accommodation facilities to people who need to be under stay-home notice as a matter of precaution.

In Japan, Noku Osaka has been closed for operations since November 2020. The group’s upscale resort in Maldives, Noku Maldives, has received enquiries since travel restrictions were  lifted in July 2020. Additionally, the group’s second resort asset in Thailand, Noku Phuket, is expected to begin operation in 2022.

The office building at 350 Queen Street in Melbourne CBD (Photo: TE Capital)

Revenue from the property investment segment remained relatively stable at $7.4 million in FY2020, compared to $7.7 million in FY2019. It was supported by rental income from Roxy Square and NZI Centre.

Overall, the group’s gross profit margin for FY2020 for the property investment segment was seven percentage points lower at 17%, from 24% in FY2019. This was mainly due to lower profit margin from the property development and hotel egments. Gross profit for FY2020 decreased 69% to $33.3 million from $106.2 million over the previous corresponding year.

The group has recently announced the investment of a 40% interest in a commercial tower located at 350 Queen Street, in Melbourne, Australia. The  tower comprises offices, retail offerings and community amenities. It will also be redeveloping former Melbourne House to a commercial development to tap recurring income streams.

Read more: TE Capital Partners and Roxy Pacific jointly acquire office tower in Melbourne CBD for A$145 mil

In New Zealand, 205 Queen Street in Auckland’s CBD enjoyed a high occupancy rate of 84% as of Dec 31. The wholly owned NZI Centre is also fully leased to the insurer IAG New Zealand.

Roxy-Pacific also acquired a 49% stake in a five-storey retail building, VIVEL Shibuya, located at Shibuya-Ku, in Tokyo, Japan.

“For property investment, through proactive asset management, we have continued to attain a high average occupancy of 88% as at Dec 31, 2020,” says Teo. Barring any unforeseen circumstances, the directors expect the group to be profitable in the financial year ending Dec 31, 2021.

Teo: We continue to be highly selective in land acquisition, with a focus on freehold sites in Singapore

Due to government grants received for the Job Support Scheme, higher foreign exchange gain and higher fair value gain from investment property at Roxy Square, other operating income increased 129% to $16.4 million in FY2020.

Share of results of associates fell to a loss of $7.4 million in FY2020 compared to a profit of $8.5 million in FY2019, as a result of additional tax expenses for the group’s divested investment in 8 Russell Street, Hong Kong, in 2H2020, and the provision of impairment loss on its properties in the overseas associated companies. This was partially offset by the profit from the sale of property in Ginza, Japan, in 1H2020.

Overall, Roxy-Pacific’s balance sheet remained healthy with cash and bank balances of $395.6 million, and net gearing stayed low at 0.64 times. 

SINGAPORE (EDGEPROP) - While most businesses tightened their belts this year, Roxy-Pacific Holdings went on a shopping spree. Most recently in November, the Singapore-listed property developer acquired a residential development site in the Guillemard neighbourhood for $93 million. Occupying a land area of 37,131 sq ft, the developer intends to build a 137-unit residential project and launch it by 3Q next year. 

The developer acquired a residential development site in the Guillemard neighbourhood for $93 million (Credit: Cushman & Wakefield)

“The area is a bit underrated and under-appreciated,” says Teo Hong Lim, executive chairman and CEO of Roxy-Pacific. “Although there is still a stigma to it, a lot of F&B shops have set up there, further revitalising the neighbourhood,” he says, referring to the Geylang estate, more infamously known as Singapore’s red-light district. 

The developer was on a hunt for new sites to build on. Likening the business to a “manufacturer”, Teo tells EdgeProp Singapore that they try to cater to different segments of the market. “Our mass-market stock is actually running low, so we felt that it was probably high time that we acquire new supply,” he says. 

Projects that cater to the wider segment of the market are now priced on average at between $1,800 psf and $1,900 psf, although in the past, that used to mean property prices ranging between $1,300 psf to $1,400 psf, says Teo. 

The office building at 350 Queen Street in Melbourne CBD (Credit: TE Capital)

The decision to purchase the Guillemard site was also partly due to the healthy residential market sentiment in Singapore. “Despite Covid-19, the property market, somehow or another, seems to be moving,” says Teo. Although sales were sluggish at the start of “circuit breaker”, momentum started to pick up towards the end of the lockdown and as measures were eased, says Teo. As at November, developers in Singapore have already sold 8,791 private new homes, although this is still 8.1% lower than the 9,566 units sold in the same period of 2019.

Among Roxy-Pacific’s fast-moving projects are View at Kismis, a 186-unit project spread across six blocks of five storeys each in the Beauty World neighbourhood. The public reception of the project “took us by surprise”, says Teo. Despite having to tear down the project showflat to make way for on-site construction, View at Kismis is now 86% sold. Designed to emulate vineyard living, View at Kismis is set to occupy an undulating plot of 100,337 sq ft, with greenery covering 40% of the surface area.  

The kitchens in View at Kismis come with wood laminate cabinets, paired with charcoal quartz countertops (Credit: Samuel Isaac Chua/ The Edge Singapore) 

Meanwhile, NEU at Novena, jointly developed by Roxy-Pacific and Macly Group, comprises 87 apartments in a 17-storey tower. Riding on its “unique” locality, sales moved fast and 86% of units are already sold, says Teo. The neighbourhood is adjacent to Singapore’s upcoming largest healthcare complex in Novena, which spans 17ha and is slated for completion by 2030. The healthcare hub is expected to grow its workforce to some 30,000 healthcare professionals by this year, which provides an ideal tenant pool to homeowners at the project. 

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In Singapore’s Central Core Region, the developer is also building RV Altitude, with a total of 140 units of two-bedroom selections from 441 sq ft to 624 sq ft, and dual-key offerings from 624 sq ft. Part of its strategy is to build smaller sized units to ensure that the quantum prices of the units are more affordable, says Teo. This is in contrast to planning for larger units that would fetch more premium prices in the city centre. So far, 40% of its units have been sold.

Show unit of RV Altitude. The development offers 140-units of two-bedroom selections in the River Valley enclave (Credit: Samuel Isaac Chua/ The Edge Singapore) 

Elsewhere in Australia, Roxy-Pacific has also acquired an office building at 350 Queen Street, in Melbourne CBD for A$145 million ($145.8 million). The purchase was made via a joint venture partnership with TE Capital Partners, a Singapore investment management firm set up by family members of Tong Eng Group. “We were not able to fly down, but we are familiar [with the place] and actually already evaluated the property last year,” says Teo. 

In a time when companies are still trying to figure out their real estate footprint, Teo admits that purchasing an office in times like these still brings “some worries”. But “as developers or business people, we are also risk-takers, and you have to take some independent views, and until today I think there is no clear view whether work-from-home will effectively cut down office demand,” he says. 

To hedge against the uncertainty, Teo’s principle is to stick to key cities. “These places have been around for decades, and demand for office spaces here are not going to shrink to zero,” he says. “What could happen, the way I see it, is that there will be a flight to quality,” Teo explains. 

Large companies would still require a physical office, and typically flock to central locations because it is a converging point. “My view is that offices in the outskirts may actually, after a while, start to drop in demand further.”

Show unit of NEU at Novena. Owing to its proximity to Singapore’s upcoming healthcare hub, sales at NEU at Novena moved fast and 86% of units are already sold (Credit: Samuel Isaac Chua/ The Edge Singapore)  

Teo believes that once restrictions are lifted for people to go back to the office, crowds will start trickling in. “At least from the bosses thinking, we want staff to be back. Of course, all these Zoom meetings help — we don’t need to wait for people and there isn’t a valid reason to be late now. But at the end of the day, it’s still different.” Teo himself, who has already returned to the office, finds it “demoralising” when having to work in a largely empty office. 

What helps balance out the risk of the future for offices is also longer leases. With multiple office buildings in Auckland, in New Zealand, and Melbourne and Parramatta in Australia, Teo shares that leases there run an average of two to three years. “So in a way, for the next two to three years, we are not going to face a complete collapse of our income.” 

Roxy-Pacific’s joint-venture project along Grange Road, 120 Grange, comprises 56 units of one- and two-bedders and is now fully sold (Credit: Roxy-Pacific)

Beyond just residential and office, Roxy-Pacific also owns hospitality and retail properties. Its main strategy overseas is to acquire buildings that have already been built, which it can take over immediately. “We are quite yield-based, and hope to find something that we can buy and straight away — through financing — make a certain net yield,” he says. 

This strategy paid off for one of its acquisitions of a retail building in Ginza, Japan, which it acquired for JPY6 billion ($76.95 million) in June 2019, and subsequently sold this March for JPY8.7 billion.

Roxy-Pacific also owns a 40% interest at 33 Argyle Street, in Parramatta, Sydney, which is a B-grade office building comprising a quasi-retail ground floor suite and café, three levels of above-ground parking providing 138 car spaces, six upper office levels and rooftop plant rooms (Credit: TE Capital)

In Dec 2017, the developer also acquired a commercial building, Melbourne House, along Little Bourke Street, which it had intended to redevelop into a hotel. But due to the havoc that the pandemic caused to the hospitality industry, the property player is revisiting its decision. 

“Very likely it may become an office building”, he says, restoring the property to its former glory. Prior to the acquisition, the building used to house office tenants. 

“We typically run a strategy that, while we are doing the plans for the property, we don’t demolish the building,” says Teo. Now, the developer is evaluating whether or not to top up another seven to eight storeys to create a “brand new office building”, which would “save us quite a bit of construction cost”, he says. 

Besides these, the developer also owns hotel properties in Kyoto and Osaka in Japan, and the Maldives, which it recently opened this year. Construction is also underway for a 91-key boutique resort in Phuket, which Teo estimates would be ready by 3Q or 4Q of next year. However, “we may not be opening it yet, depending on whether Covid-19 is still ongoing,” he says.

Dunearn 386, another of the developer’s projects, comprise 35 units in a five-storey block along Dunearn Road (Credit: Roxy-Pacific)

Looking ahead, Roxy-Pacific’s guiding mantra to the unpredictability of it all is to stay cautious. “Because hospitality will take a while, that’s one of our segments. For office, we can do our investment and manage our current buildings, but we also have to watch how the work-from-home impact will unfold,” says Teo. 

“We will work hard to try to look for opportunities, but carefully. We have a certain budget to run, but we also don’t want to drain down our ideal liquidity position, to put ourselves in danger. it’s not a time to be overly aggressive.” 

SINGAPORE (EDGEPROP) - On July 7, TE Capital Partners, the Singapore investment management firm set up by two siblings of the third-generation Teo family of Tong Eng Group, and Singapore-listed property group Roxy-Pacific Holdings, jointly announced that they had acquired an office building at 350 Queen Street, in Melbourne CBD, in a 60:40 joint venture. The purchase price of A$145 million ($141.87 million) for the 20-storey building makes it one of the biggest investment deals in Melbourne this year, after Singapore’s sovereign wealth fund, GIC jointly with Dexus paid A$644 million for a 50% stake in Rialto Centre in April; and A$206 million for a 50% share in 222 Exhibition Street at the end of July.  

Emilia Teo and Terence Teo, managing directors of investment and asset management firm TE Capital Partners, and members of the third generation of the Teo family of Tong Eng Group (Photo: Albert Chua/EdgeProp Singapore)

The deal at 350 Queen Street comes amid heightened risks in the commercial market due to Covid-19, and coincided with the imposition of a six-week lockdown in Melbourne by the Victoria State Premier, Daniel Andrews. As the level of daily new infections continued to spike, a "state of disaster" was declared on Aug 2, with more drastic measures imposed for the next six weeks. This includes a curfew from 8pm to 5am, grocery shopping limited to one person per household, and travel distance restricted to 5km from home. With more businesses to shut in this latest lockdown, an additional 250,000 jobs could be lost. 

Between January to June, sublease availability in the Melbourne  office market surged 365% to 72,800 sq m (783,641 sq ft), says CBRE in its 2Q2020 office report. Contraction was the primary driver of sublease vacancy, which is expected to rise further in 2H2020 with more job cuts announced by several major occupiers. 

Putting further stress to office vacancy is the biggest increase in new supply in nearly three decades over 2020-21, adds CBRE. While around 90% of the upcoming new supply in the CBD has been pre-leased, some of the resulting backfill is forecast to drive vacancy up. CBRE data shows vacancy in Melbourne CBD at 3.2% in 2Q2020. 

Whie rents have held steady, a substantial rise in incentives has pushed effective rents down, notes CBRE. Effective rental growth is expected to stay negative until 2022. 

The office building at 350 Queen Street in Melbourne CBD, purchased by TE Capital in a joint venture with Roxy-Pacific Holdings for A$145 million last month (Photo: TE Capital)

Even though the immediate outlook seems bleak, siblings Emilia Teo and Terence Teo, managing directors of TE Capital Partners, are unfazed. “There may be headwinds in the near term,” says Emilia. “But pre-Covid, Melbourne had a strong leasing market with low vacancy rates, strong rental growth and good returns. Post-pandemic, we still believe in the long-term prospects of Melbourne and Australia.” 

The current market uncertainty has also made vendors more inclined to adjust selling prices in order to find a buyer, points out Terence. For instance, at 350 Queen Street, the building owner was willing to offer further price adjustments. The 20-storey commercial building has a total net lettable area of 235,889 sq ft, with predominantly office space and some retail space. It is currently 87% occupied, with weighted average lease expiry of four years. 

This latest acquisition will be in the portfolio of TE Capital, which was set up by Emilia and Terence last year as an investment and asset management firm. “While we have already done many joint ventures with external parties, we wanted a designated institutional outfit that would formalise our intent to enter investment management and asset management,” says Terence. “We will co-invest alongside other like-minded capital partners.” 

TE Capital will not only invest and manage the assets of TE2 Development, the development and investment arm of the family office set up by their father, Teo Tong Lim, the group managing director of Tong Eng Group; but that of other high–net-worth families and institutions as well. 

Goodwood Grand, the freehold development with 65-unit condominium and eight strata bungalows was developed by Tong Eng Group and completed in 2017 (Photo: Albert Chua/EdgeProp Singapore)

With half a billion worth of investments in Australia today, the Teo siblings are, understandably, famous there, especially in Melbourne. In Singapore, the storied group has a history spanning 70 years. The company was founded by Teo Thye Chor and his brother, Thye Hong, who came to Singapore from Fujian in the 1940s after World War II. The business started with the trading of electrolytic tin-plates used in the production of tins and bottle caps. 

The brothers saw the opportunity to venture into property development in the 1950s when there was a call to rebuild Singapore after the war. They developed the first industrial estate in Paya Lebar. Thereafter, they scooped up greenfield freehold land in the suburbs of Changi, Upper Serangoon Road, Yio Chu Kang and Pasir Panjang. Over the years, the land bank was developed into residential projects such as Changi Heights, Poshgrove East, Stratton Park and Trendale Tower. The business was passed on to the second generation, Thye Chor’s two sons, Tong Wah and Tong Lim. Thye Hong’s two sons, Daniel and  Teck Weng, started Hong How Group, and remain directors of Tong Eng Group. 

Following the passing of Tong Wah in 2007, the group has been headed by his younger brother, Tong Lim, who has been with the firm for more than four decades. Recent residential developments include Belgravia Villas and Belgravia Green, located off Ang Mo Kio Avenue 5; Goodwood Grand and Three Balmoral located along Balmoral Road in the prime district 10. Meanwhile, the 85-unit Wilshire Residences and the 186-unit View at Kismis, both launched last year, are developed jointly by TE2 Development and Roxy-Pacific. 

The showflat of the 85-unit freehold Wllshire Residences, a joint venture project between TE2 Development and Roxy-Pacific Holdings, that was launched last year (Photo: Samuel Isaac Chua/EdgeProp Singapore) 

Tong Eng Group is no stranger to commercial developments either. The group’s developments include Arc 380, the redevelopment of the group’s former Eminent Plaza and Lavender Food Square; as well as Centrium Square, a redevelopment of the group’s former Serangoon Plaza. The group’s headquarters is still at Tong Eng Building on Cecil Street, where it has been for the past 40 years, since the 999-year leasehold, 26-storey office tower was completed in 1980.

Over the past decade, Tong Eng Group and its various entities have acquired $2 billion worth of properties and developed projects worth more than $3 billion in terms of gross development value.

Emilia and Terence have made their mark in Australia, primarily in Melbourne and Sydney. Before the lockdown, they had been travelling to Australia every few weeks. They even have have a team of 10 to help them undertake the day-to-day activities of managing their assets and looking at investment opportunities. Of the 10, five are based in Australia. The Teo siblings continue to be “very hands-on” in all aspects of their business, adds Emilia. 

The NSW Aboriginal Land Council’s building at 33 Argyle Street in Parramatta, Sydney, was purchased jointly with Roxy-Pacific for A$40.8 million in November 2018 (Photo: TE Capital)

“We have had pretty good returns given the good governance and strong population growth,” says Emilia. “Australia is where we have built our capabilities and it’s a market we will continue to focus on.” 

Their first foray in Australia was the purchase of the former Harley-Davidson building at 111-125 A’Beckett Street in the Melbourne CBD for A$38 million in early 2015. In January 2017, the property was sold for A$61 million to Malaysian developer S P Setia, which is developing the site into a new mixed-use project called Uno Melbourne, featuring 486 apartments and 256 hotel rooms.

The second property in Australia was a 14-storey, freehold commercial building at 117 Clarence Street in Sydney CBD. It was purchased in a 50:50 joint venture with Roxy-Pacific for A$81 million in late 2015. The partners flipped it for A$153 million, or 89% higher, in August 2018. 

In November 2017, Roxy-Pacific and TE2 Development also purchased a freehold building at 312 St Kilda Road in Southbank, near Melbourne’s CBD, in a 45:55 joint venture. The purchase price of the building was A$74.1 million. The freehold building is mixed-use, and contains a conference centre, apartments, offices and basement carpark.

The freehold building at 312 St Kilda Road in Southbank, near Melbourne’s CBD, purchased jointly with Roxy-Pacific for A$74.1 million in November 2017 (Photo: TE Capital)

Another joint purchase by Roxy-Pacific and TE2 Development was in November 2018: the NSW Aboriginal Land Council’s building at 33 Argyle Street in Parramatta, Sydney, for A$40.8 million. TE2 Development holds a 60% stake in the property, with Roxy-Pacific holding the balance 40% stake.

Besides the CBD area, the Teos have also invested in suburbs that show promising growth. One such purchase was an 11-storey office building at 5 Queens Road, Melbourne, for A$116.6 million in December 2016, with an initial yield of 5.6%. The 11-storey hexagonal glass and granite office building has a floor area of 19,0743 sq ft, and basement parking for 323 cars.

 The Teo siblings also gravitate to buildings with strong tenant covenants, for instance, government agencies or established firms. One such purchase was the headquarters of the Country Fire Authority at 8 Lakeside Drive, Burwood East, in Melbourne, for $18.08 million in September 2017. Another is 33 Argyle Street in Parramatta, Sydney, where the NSW Aboriginal Land Council is the anchor tenant. At 312 St Kilda, they have a strong multinational healthcare tenant.

“We are familiar with the nuances of the real estate market, tenant demand and overall dynamics of these different sub-markets,” says Terence. “We look at each individual asset in relation to our whole portfolio.” 

The 11-storey office building at 5 Queens Road, Melbourne, bought for A$116.6 million in December 2016 (Photo: TE Capital)

Besides core assets in the CBD, they have also been interested in “value-add opportunities” — properties that are well located but where the buildings could benefit from better management, repositioning or asset enhancements, says Emilia. 

An example is the office at 350 Queen Street, purchased with Roxy-Pacific last month. The building has an initial yield of 4.8%, which is in line with prime yields in the Melbourne CBD in 2Q2020, according to CBRE. TE Capital intends to invest a further $10 million in an asset enhancement programme over the next 12 months. This includes reconfiguring the arrival lobby, bringing in exciting F&B and retail offerings, adding end-of-trip facilities, refurbishing the lift lobby on every floor, and upgrading key building services such as energy efficiency. 

Emilia and Terence see potential in the office building given that it is part of the landmark mixed-use development Queen’s Place, designed by award-winning architects Fender Katsalidis Architects and Cox Architecture. The office building sits between two upcoming 79-storey residential skyscrapers of more than 810 feet (247 metres), which will have a total of 1,700 apartments when completed. The residential towers will be among the tallest towers in Melbourne, and located close to Queen Victoria Market as well as public transport such as the Melbourne Central station and the upcoming State Library station. 

Chinese developer 3L Alliance is behind Queen’s Place. According to an update on the project on June 26, construction of the North Tower, the first residential tower, is well underway, despite the challenges of Covid-19. Façade panels are being installed, ground-floor tenancy and fitouts are underway, supermarket fitout in the basement and carpark is almost complete, and construction of the tower continues. 

The headquarters of the Country Fire Authority at 8 Lakeside Drive, Burwood East, in Melbourne was purchased for $18.08 million in September 2017 (Photo: TE Capital)

When the residential tower is completed, the commercial office tenants at 350 Queen Street will benefit from the upcoming public plaza with its retail laneway offering a mix of restaurants and shops, says TE Capital in a statement. 

“Despite the market uncertainties arising from Covid-19, we believe the office market in Australia will outperform in the long term,” says Terence. “Some of our tenants prefer to stay put and renew their leases given the uncertainty. They prefer to stay in an existing quality building where they are comfortable, rather than chase a lower rent elsewhere. For other tenants, it’s a flight to quality.” 

For now, Emilia and Terence will focus on Australia and Singapore. “We will look at other markets once travel restrictions are lifted,” says Terence. 

Beyond Australia and Singapore, TE Capital will also look at investment opportunities in China, Japan and South Korea. “In these markets we are focusing on the office sector too,” says Terence. “However, we are open to other asset classes, for instance, multi-family and selective retail and hospitality.” 

Check out the latest listings near Belgravia Villas, Belgravia Green, Goodwood Grand, Three Balmoral, Wilshire Residences, View at Kismis

For price trends, recent transactions, other project info, check out these projects' research page: Belgravia Villas, Belgravia Green ,  Ang Mo Kio Avenue 5,  Goodwood Grand,  Three Balmoral,  Balmoral Road,  Wilshire Residences ,  View at Kismis, 

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