Far East Shopping Centre’s owners are holding out for a better offer (Image: Far East Organization)
For the second time in three months, an attempted collective sale of Far East Shopping Centre has collapsed at the last hurdle, with owners rejecting an offer of roughly S$880 million ($654.5 million) for the strata-title property on Singapore’s Orchard Road.
The prospective buyer, whose identity has yet to be publicly revealed,
With owners of 80 percent of the ageing shopping centre required to approve the deal in order for a transaction to proceed, the offer from the unnamed buyer failed to gain acceptance from 70 percent of the owners, according to sources familiar with the transaction who spoke with Mingtiandi. After the disintegration of an agreement reached last year to sell the property at S$908 million, a committee representing the owners had put the property back on the market in April at a S$928 million guide price.
Mingtiandi reported last month that an Indonesian developer new to the Singapore market was offering S$850 million for the property near the intersection with Paterson Road, citing sources familiar with the deal. The failure of this latest bid was first reported by the Business Times.
The offer came on the heels of Du Shuanghua’s Bright Ruby Resources withdrawing its S$908 million bid for Far East Shopping Centre after failing to win approval to expand the floor area permitted for a new project on the 999-year leasehold site.
Deal Proves Elusive
The failed offer valued the 1970s-era property at S$2,925 per square foot, with the next owner expected to develop a new project on the site at 545 Orchard Road.
The next-door Voco Orchard Singapore forms part of HPL’s proposed redevelopment project (Image: HPL)
Bright Ruby had terminated the earlier deal after failing to win approval to expand the floor area of the project by up to 20 percent under Singapore’s Strategic Development Incentive scheme.
That failure pushed the price of its project to S$3,125 per square foot from the S$2,604 per square foot it had hoped to achieve through inclusion in the programme, which lets developers aggregate two or more commercial properties into a new project to expand the plot ratio if they incorporate residential space into their design.
The owners of Far East Shopping Centre have thus far been unable to interest the landlords of neighbouring properties in working together on a sale.
Reimagining the Belt
Should a collective sale ultimately succeed, the project would join a wave of Orchard Road redevelopment efforts as the government encourages revitalisation of the famed shopping belt.
Next door to the mall is Hotel Properties Ltd’s Voco Orchard Singapore hotel, which, together with HPL’s neighbouring Forum mall and HPL House, has already been approved for redevelopment by Singapore’s URA.
One block to the west, Delfi Orchard, an 11-storey retail and apartment complex majority-owned by City Developments Ltd, was launched for collective sale in April at an asking price of S$438 million, potentially paving the way for a new project.
Singapore’s collective sale market has stayed quiet this year, with the island nation recording its first successful collective tender in April with the S$49 million sale of the Sin Ming Centre commercial and residential building in the Upper Thomson area to Apex Asia Development.