Lucky Plaza medical suites to be put up for sale

High returns for medical premises has prompted a firm run by the Hong Leong Group to sell the 56 doctors’ suites occupying the entire fifth floor of Lucky Plaza.

Hong Property Investments may start selling the units - with or without tenancy - in the Orchard Road mall as early as next month, once pricing is finalised, said the sole marketing agent Knight Frank.

There are tenants in 26 of the suites at the Orchard Medical Specialists Centre, which range in size from 589 sq ft to 2,056 sq ft. Hong Property is raising rents from $9 per sq ft (psf) to $12 psf in line with the market.

‘Demand for medical suites has improved tremendously in the last year,’ said Ms Ong Way Wei, the manager of Hong Property. ‘There’s a lack of supply in the area, in places like Mount Elizabeth and Paragon.’

Hong Property has not decided on the sale price but Knight Frank expects the suites to sell for at least $3,000 psf.

The firm - which is 70-per cent owned by Hong Leong and the rest by Hwa Hong - bought the fifth floor of Lucky Plaza in 1999 from Metro Holdings.

The $48-million deal worked out to $822 psf for 58,362 sq ft of freehold space.

The firm then applied for change of use for the space and converted it into medical suites.

Since then, the market has moved heavily in its favour with medical tourism taking off.

Singapore aims to attract one million foreign patients by 2012 and is releasing more land for medical facilities.

Specialist doctors largely catering to the foreign market have driven up prices, making medical suites among the most expensive property here on a per-sq-ft basis.

Last month, a 797 sq ft, 99-year leasehold suite at Mount Elizabeth Medical Centre was sold for a record $4,017 psf.

There has also been talk that a recent deal was done at $4,200 psf. Two other deals completed in the centre last December and January were at $3,801 psf and $3,600 psf respectively.

There were few deals last year, but in 2005, the units at Mount Elizabeth were transacted at between $2,200 psf and $2,680 psf.

At the freehold Gleneagles Medical Centre, two deals have been recorded so far this year. A 926 sq ft unit was sold for $3,797 psf last month and another, a 678 sq ft unit, at $3,500 psf in January.

At Novena Medical Centre - the newest medical centre with units for sale - asking prices have also risen, to $2,650 psf from $2,300 psf last October.

A specialist who recently bought a suite at Mount Elizabeth for about $4,000 psf, or around $5 million, in partnership with another doctor, said they were also paying for the branding.

Mount Elizabeth Medical Centre is known to be a medical hub which also attracts walk-ins, he said, and capital values could keep appreciating.

Rentals in the medical suites market have also shot up significantly in the past few months.

Asking rents at Mount Elizabeth are at $13 psf, up from $10 psf to $12 psf last October.

At the lease-only suites in Paragon, asking rents are $10 psf to $12 psf, up from around $8.50 psf last October, said market watchers.

Source : Straits Times - 18 Apr 2007