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CapitaLand Purchases Asia Square Tower 2 for S$2.09 billion

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Singapore real estate company, CapitaLand Commercial Trust, has agreed to buy Asia Square Tower 2, part of a world-class commercial development in Singapore’s Marina Bay business and financial district. Real estate consultancy JLL advised on the transaction on behalf of the seller, BlackRock Asia Property Fund III. The sale represents the largest office transaction in both Singapore and the Asia Pacific region in 2017 and is the second largest office transaction globally this year.

“The sale of Asia Square Tower 2 continues the trend of buyers being attracted to mega deals in Asia. The sales process generated strong interest from major global investors and sends a clear message about the continued recovery of the Singapore office market,” says Stuart Crow, Head of Asia Pacific Capital Markets, JLL.

According to Greg Hyland, Head of Capital Markets, Singapore, JLL: “The Singapore office market is really starting to gain pace and this deal is likely to spur further interest, both domestically and internationally. Investors will be aware that we are at a point in the cycle where there is still the opportunity to get good value, but we expect prices to pick up in the coming quarters as supply starts to taper down between now and the end of 2019.”

The 46-storey Tower 2 has a net lettable area of 778,719 square feet. Asia Square Tower 1 was sold in June 2016 to sovereign wealth fund Qatar Investment Authority for S$3.4 billion (US$2.45 billion). The entire Asia Square asset, which comprises Tower 1, Tower 2 and the Westin Singapore, achieved a combined sale price of S$5.8 billion (US$4.3 billion). The three elements were sold in 2016, 2017 and 2014 respectively.

JLL has been the leasing agent and property manager of Asia Square since it opened in 2011. Tenants of Tower 2 include major financial institutions such as Allianz, Mizuho, Mitsui, National Australia Bank and Westpac.

Afro-Asia Shipping Company and Shimizu Corporation Enter into Joint Venture Agreement

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Afro-Asia Shipping Co (Pte) Ltd (AAS) and Shimizu Corporation Investment and Development Division recently announced their joint venture to redevelop Afro-Asia Building, one of the oldest office blocks along Robinson Road in Singapore’s Central Business District (CBD), into a brand new Grade A office building. Cushman & Wakefield’s Capital Markets team acted as the advisor for the transaction.

AAS and Shimizu Corporation have incorporated a joint venture company, Robinson Development (Pte) Ltd, to which AAS will be transferring the lease rights and retain a controlling interest in the company. Robinson Development (Pte) Ltd will fund the cost of constructing the office building with loan assistance from financial institutions. The total cost for the entire project is estimated to be in excess of SGD320 million. Shimizu Corporation will carry out the demolition in November this year and construction is expected to commence in April 2018, with completion scheduled for mid-2020.

Mr. Tan Chin Hoon, Managing Director, AAS said, “AAS is privileged to partner with Shimizu Corporation, a well-established name in the real estate and construction industry. The new development will enhance the façade of Robinson Road and we are confident that the redeveloped 63 Robinson Road will be a much sought-after commercial address in Singapore.”

Mr. Hideto Kawakami, Deputy General Manager, Shimizu Corporation said, “We are excited to expand our investment portfolio in Singapore through this joint venture. For the new development, we will be bringing in the latest eco-friendly designs and state of the art technology from Japan to meet the future needs of commercial occupiers. They can expect flexible and efficient prime space with a modern touch that will accommodate the latest and future working trends.”

Built in the 1950s, Afro-Asia Building, which is currently seven-storeys high with a four-storey annexe will be redeveloped into a 19-storey high development with a total gross floor area of 16,908 square metres. It will boast panoramic views of the CBD skyline and a roof top garden. Adopting a green design approach, the building will incorporate innovation and green technologies including efficient air- conditioning management, cleaning and maintenance services, which are prevalent in Japan. There are also plans to get the development certified under the Green Mark Platinum and LEED Platinum standards.

The new development will have a Food & Beverage (F&B) component on the ground floor with office spaces from levels 7 to 18. The site is highly accessible and is in close proximity to the North-South, East-West and Downtown MRT lines. It is also about 120 metres away from the new Shenton Way MRT station due to complete in 2021.

Ms. June Chua, Executive Director, Leasing at Cushman & Wakefield noted that the redevelopment comes at an opportune time as demand for new Grade A office space in the CBD is picking up momentum and this new development tactically meets market demand for exclusive space sought after by mid-size office occupiers.

“According to our research, there will be approximately 137,000 square metres of Grade A office space completing in the CBD in the next three years, and all these developments, with the exception of 63 Robinson Road, are designed for larger office occupiers. Given the very limited good quality office buildings which have been developed over the past 10 years in Shenton Way and Tanjong Pagar, we expect pent-up demand for quality and exclusive space which 63 Robinson Road is well placed to serve,” she said.