Market players turn to flipping office properties

It’s not just homes that are being flipped for a fast buck these days. The trend seems to have extended to offices, the value of which has been rising amid strong demand and limited supply.

Market watchers have told BT that most of the office buildings that changed hands in the past year or so are ‘in play’.

Recently, there have been at least two concrete examples. HB Robinson, a freehold 14-storey office block that a CLSA fund bought last year for $80 million, or $869 psf of net lettable area, was sold a couple of months ago to a Credit Suisse fund for $119 million or about $1,290 psf, market sources said.

Then there is the former OUB Building at 60 Robinson Road opposite Lau Pa Sat, acquired by Injaz AsiaEquity Property Fund I. The acquisition was completed in December last year, and the building was sold soon after to Bank of East Asia for $94.5 million.

That price works out to $1,450 psf based on an estimated 65,000 sq ft net lettable area when the freehold building’s refurbishment is completed in December 2008. Asia Equity Partners, which manages the fund that is selling the property in the latest deal, is sprucing up the 15-storey building according to specifications set by Bank of East Asia, which will move there from its Market Street office.

Injaz AsiaEquity Property Fund I bought the freehold building from United Overseas Bank last year for $42.9 million and is spending another $18 million doing it up.

There is also market talk that negotiations are going on to sell SIA Building in Robinson Road, bought last year by a property fund managed by CLSA Capital Partners for $343.88 million or $1,165 per sq ft. Talk is that several offers have been received, including a joint bid from a Lehman fund and a Credit Suisse fund and a separate offer from German pension fund SEB. The latter is said to have missed out on several office deals in Singapore in the past year.

Industry observers suggested CLSA may already have been offered as much as $1,800 psf for SIA Building. But they would not be surprised if a bidding war ensues and the price goes even higher. They said CLSA could be eyeing $2,000 psf.

Over in the Church Street area, two recent buyers of office floors at Samsung Hub - Ho Bee and an overseas fund linked to Buxani Group - are said to have received offers of up to $1,800 psf for their space, mostly from overseas parties, including Hong Kongers. Ho Bee bought its space in February for $1,384 psf from CapitaLand, while the Buxani-linked fund is said to have paid about $1,560 psf around the same time for space it purchased from OCBC.

In another recent office deal - though not of the ‘flipping’ variety - Asia General Holdings group, which includes TM Asia Insurance Singapore, is said to have sold about 69,000 sq ft on the lower floors (basement and levels 1, 2, 8, 9 and 10) of 80 Robinson Road for $72.88 million. The buyer was Hong Leong Holdings, which owns the rest of the 28-storey building.

Source : Business Times - 10 Apr 2007