Singapore’s Chevron House Goes on Sale for $515M


CBRE’s Jeremy Lake sees potential interest from Hong Kong investors

Another major Singaporean office transaction could be in the works, as the owner of a commercial tower at the city’s Raffles Place commercial hub has put the 32-storey building on the block for an asking price of S$700 million ($515.2 million) according to an announcement from a brokerage tasked with the sale.

Deka Singapore, a unit of Germany’s Deka Immobilien, launched an expressions of interest process last week to receive offers for Chevron House, a 261,280 square foot (24,274 square metre) office and retail property at 30 Raffles Place, with a deadline of September 14.

The announcement comes amid series of headline office transactions in Singapore’s downtown core in recent months as sentiment improves in the city-state’s commercial property market.

Office Tower in Singapore’s Business Epicentre Goes on Sale

Completed in 1993, Chevron House consists of a five-storey retail podium with a 27-storey office tower, on a lease-hold site with a remaining tenure of 71 years. The building is wedged around the same commercial square that it is home to CDL’s Republic Plaza and One Raffles Place, and has direct access to Raffles Place MRT station. The office and retail components have a net lettable area of 215,667 square feet (20,036 square metres) and 45,613 square feet (4,238 square metres), respectively.

Chevron House at Raffles Square is expected to fetch at least S$700 million in a sale

The property is 98 percent occupied overall, anchored by tenants Chevron International, a subsidiary of the global energy giant, and True Fitness, which has three storeys of exercise and yoga space. Deka Singapore hired locally based RSP Architects to evaluate potential asset enhancement efforts for Chevron House, including renovating the office common areas. The property has an unused gross floor area of around 14,950 square feet (1,389 square metres) that can be incorporated in the retail podium, subject to approval.

Deka, which acquired Chevron House in 2010 from a property fund managed by Goldman Sachs for about $420 million, hired international property consultancies CBRE and JLL to shop the building starting on August 2.

CBRE expects Chevron House to achieve a “very realistic” valuation of over S$700 million, reflecting a price of $2,700 ($1,987) per square foot on the building’s total net lettable area, commented Jeremy Lake, Executive Director, Capital Markets at CBRE in the announcement. Lake noted that based on the target price, the net yield should be in the vicinity of 3.6 percent in the first year.

Hong Kong Investors Targetted as Potential Buyers

The Raffles Place financial district has been a prime target for investors as transaction activity in Singapore’s office market heats up. This past May, a subsidiary of Richard Li’s FWD Group bought a 50 percent stake in One George Street, a 23-storey office building in Raffles Place, from CapitaLand Commercial Trust (CCT) for S$591.6 million ($424 million). In February, Nanjing-based property developer Fullshare Holdings agreed to purchase GSH Plaza, a 28-storey office tower also in Raffles Place, for S$725.2 million ($512 million).

Just down the block, DBS Group sold the PwC Building to Canada’s Manulife for S$747 million ($525.7 million) in February. And about one kilometre southwest of Chevron House a group of investors led by Singapore-listed Perennial Real Estate Holdings are reportedly mulling the en bloc sale of AXA Tower at 8 Shenton Way, for at least S$1.65 billion ($1.2 billion).

The sellers of Chevron House appear to be taking aim at Hong Kong investors, who have played an outsize role in the recent string of deals in the city-state. “Now that Singapore’s office market appears to have bottomed out after 2 years of rental decline, the attention of investors in Hong Kong looking to diversify their real estate portfolios has been piqued,” noted Lake in the CBRE statement.

“With strong Hong Kong buying activity in Singapore in the first half of 2017, Hong Kong investors are poised to play a more active role in Singapore’s office market in the next 6 months,” said Lake.