Indonesian group buys 2 floors at Singapore's Octagon for S$30.3 million

[SINGAPORE] AMID green shoots of recovery in the strata office market, a few whole-floor deals have surfaced recently in the Central Business District.

At The Octagon in Cecil Street, the family behind Indonesian conglomerate Central Cipta Murdaya (CCM) is shelling out nearly S$30.33 million or S$2,450 per square foot for levels nine and 10.

BT understands that a Singapore-incorporated company owned by members of the Murdaya family is acquiring the two floors from a fully-owned subsidiary of The Singapore-Johore Express, controlled by the Lee family which is also behind listed Hotel Royal.

The Murdayas already own the top two floors of the 25-storey freehold building.

They use Level 25 as their office.

Levels 9 and 10, which they are buying, are each 6,189 sq ft and add up to a total strata area of 12,378 sq ft. The space is mostly vacant and the Murdayas are expected to lease it out.

The S$2,450 psf the family is paying for levels 9 and 10 is higher than the S$2,294 psf that it paid for Level 24 in late-2016. It picked up Level 25 for S$1,278 psf in 2009.

Cushman & Wakefield brokered the sale of levels 9 and 10.

Meanwhile, at Springleaf Tower in Anson Road, the 20th floor has changed hands for S$25 million or S$2,419 psf. The 37-storey building is on a site with about 77 years' balance lease.

The seller is Hequ Trading, controlled by an Asif family, and is engaged mainly in trading bulk products such as palm oil, rice, margarine, shortening and soaps, according to information on its website. Hequ is a related company of The Royal Group Indonesia, which produces and distributes palm oil products.

The buyer is understood to be a unit of a Hong Kong-headquartered company that supplies steel mill rolls.

CBRE is understood to have brokered the deal.

Last month, BT reported that the 20th floor of Samsung Hub, a 999-year leasehold building in Church Street in the Raffles Place financial district, was sold for S$46.62 million or S$3,550 psf - busting the previous high of S$3,500 psf in the building,

Knight Frank Singapore head of research and consultancy Alice Tan said: "There seems to be a gradual recovery in strata office transaction volumes in the first five months of this year, in the light of rising office rents especially in the CBD.

"We are seeing more enquiries for strata offices since late last year - mostly from foreign investors; no additional buyer's stamp duty is payable for commercial property unlike for residential property."

Sammi Lim, director of capital markets at CBRE, who brokered the deal at Samsung Hub, says the majority of those evaluating purchase of strata offices in the CBD are looking to occupy the space themselves. "This is especially against the backdrop of rising office rents, with the trend projected to continue in view of tighter office supply in the next couple of years."

"For similar reasons, investors are also returning to the market with prospects of capital appreciation," she added.

Ms Tan of Knight Frank said that foreigners keen to buy strata offices to set up their businesses here are from South-east Asia, Hong Kong and China. "Some are in trading; we have also seen those in financial-related services. They could be start-ups, while others are establishing a regional office here.

"Of course another motivation for buying their office premises instead of leasing space is the potential of capital appreciation in the future. Prices of strata offices seem to have bottomed with 999-year/freehold properties in choice locations in the CBD leading the price recovery."