Several buildings along Orchard Road have been put up for collective sale. Joining the collective sale club is strata-titled building Midpoint Orchard and Faber House, both located across the road from 313@Somerset.
Another development up for collective sale is the mixed-use development Orchard Towers. A reserve price of S$1.6 billion was approved by its owners during its Extraordinary General Meeting on 18 February this year.
Nestled in the corner of Claymore Road and Orchard Road, Orchard Towers is a stone’s throw away from malls with high footfall traffic. ION Orchard, Wheelock Place and Far East Shopping Centre are a mere 500 metres away.
Incentives offered by URA
In 2020, the Urban Redevelopment Authority (URA) offered redevelopment incentives to the owners of Midpoint Orchard, Faber House and Orchard OG under the Strategic Development Incentive (SDI) Scheme. All three properties sit on freehold sites.
Introduced in March 2019, the SDI scheme encourages the redevelopment of older buildings into mixed-use projects. The objective is to rejuvenate and transform the surrounding environment into a more vibrant and dynamic scene.
In line with URA’s Master Plan to enhance these areas, existing developments in Orchard Road, Central Business District (CBD) and Marina Centre are particularly encouraged to be redeveloped.
Part of the eligibility criteria is to have at least two adjacent sites with predominantly commercial use, so the combined redevelopment can have a more significant transformational impact. The developments should also be at least 20 years old from the date of last TOP.
This makes the three developments ideal candidates for the scheme as they sit side by side on the same stretch of road. URA is offering to raise the maximum gross plot ratio of 5.6 to 6.0 if Midpoint Orchard and Orchard OG redevelop together, and up to 8.4 GPR if all three buildings agree to participate in the same project.
Separate redevelopment in the works
Despite Orchard OG being keen to participate in the joint SDI scheme, Midpoint Orchard and Faber House decided to execute their redevelopment plans separately.
Developer and hotel operator UOL Group Limited has a majority stake in Faber House. The Singapore public listed company owns other notable properties such as Velocity @ Novena Square, United Square Shopping Mall and Odeon Towers. According to a UOL report, Faber House’s first storey was bought by United Overseas Bank.
In-principle approval from URA has been obtained to rezone Faber House to hotel use and redevelop it into a 250-key hotel under the SDI scheme. The new hotel will be an 18-storey mixed-use development featuring a bank, F&B establishments, and an urban verandah. This will amount to a total gross floor area (GFA) with plot ratio of around 11,025 sqm (118,672.11 sqft).
Construction is slated to commence in the first half of this year and run for four years to 2026.
With multiple individual ownership (around 60 owners!) making strata-titled Midpoint Orchard a challenging development to manage and redevelop, it will most likely be up for en-bloc. There has been feedback about the mall being rundown and the escalators perpetually being out of service.
Many of the building’s owners were not convinced of the cost-benefits of redeveloping in conjunction with Orchard OG and Faber House.
A marketing agent for Midpoint Orchard will be selected in the upcoming weeks by its collective sale committee for its third en-bloc attempt, priced at S$350 million. This makes it cheaper than other properties in the shopping district, which are also vying for an en-bloc.
In stark contrast, Orchard Towers is currently aiming for an eye-watering en-bloc price tag of S$1.6 billion. However, there is no certainty that the collective sale will proceed. 80% of the owners need to give the green light before the sale tender can be launched.
Much needed revitalisation
With 313@Somerset being the newest kid on the block that debuted 13 years ago, Orchard Road is well overdue for a facelift. This much-needed change is reflected in the handful of malls slated to undergo redevelopment.
Tanglin Shopping Centre
Built in the 1970s, Tanglin Shopping Centre is one of the shopping belt’s oldest retail landmarks. It was successful in its fourth collective sale attempt.
The 68,512 sqft freehold property was acquired by Singapore-based real estate investor and developer Pacific Eagle Real Estate for S$868 million. The per square foot per plot ratio (psf ppr) works out to around S$2,769.
Exclusive marketing agent Savills Singapore ran a successful marketing campaign that netted a sale price of 10% above the reserve price.
Located prominently along Tanglin Road, Tanglin Shopping Centre is commercial-zoned. Properties that are commercially zoned are appealing as it allows the flexibility of redeveloping them into various development options, such as luxury retail, hotel, residential and office.
Developers buying commercially-zoned sites can avoid the Additional Buyers’ Stamp Duty (ABSD) payable. Buyers’ Stamp Duty (BSD) is capped at 3%, versus a 4% BSD plus a 5% non-remittable ABSD for a residential-zoned site.
Currently, Tanglin Shopping Centre stands as a 12-storey commercial development made up of two complexes. There are 364 units in total, with the main podium block housing both retail and office units and the office tower containing, well, office units.
Another collective sale hopeful is Far East Shopping Centre. The owners have appointed CBRE as its marketing agent and is currently undergoing discussions on its reserve price.
A new Orchard Road
In a bid to keep Orchard Road fresh and to strengthen the popular shopping district as a lifestyle-destination, the Singapore Tourism Board (STB), Urban Redevelopment Authority (URA) and National Parks Board (NParks) came together to brainstorm and conduct consultations and a six-month study with key stakeholders.
New retail concepts, attractions, entertainment and events will be introduced in the sub-precincts of Tanglin, Somerset, Orchard and Dhoby Ghaut.
With more malls undergoing collective sale and being redeveloped into mixed-use developments, there will be no doubt that the constant evolution will breathe a fresh breath of life into our beloved retail district over the next few years.
How do you feel about the evolution of Orchard Road? Let us know in the comments section below or on our Facebook post.
If you found this article helpful, check out The 5 worst shopping malls in Singapore and Why the most expensive en bloc sale may not go through.
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