Scotts Road was once home to luxury brands Hermès and Christian Louboutin. (Image source: Savills)
Hong Kong-based real estate firm Wharf Real Estate Investment Company (Wharf REIC) is selling a luxury shopping mall along Singapore’s Orchard Road for S$450 million ($338 million). , the revitalization of first-class shopping districts is accelerating.
The company’s Singapore development subsidiary Wharf Estates Singapore has appointed Savills to market the 130,875 sq ft (12,160 sq m) boutique retail podium at the Scotts Square mixed-use development near the intersection of Orchard Road and Scotts Road.
Jeremy Lake, managing director of the real estate agency’s investment sales and capital markets team, said new owners could simultaneously unlock more rentable space and improve tenant mix to increase rental income. Point out that there is an opportunity to increase the value of the asset. It comes at a time when the Orchard Road area is receiving a boost from the government’s revitalization plans.
“Upper Orchard Road is a popular choice for buyers, especially as visitors to Singapore are rapidly increasing and we expect to see even more visitors from China in 2024 as visa-free travel begins soon. The sale at this time is timely to revitalize and enjoy great year-round shopping,” Lake said.
luxury lift lease
Despite being centrally located in the Orchard area, the mall’s rents are currently below market levels, at around S$10 per square foot per month. Savills said in a statement on Friday that given the limited supply of freehold retail properties in prime locations, the Scotts, located between the Marriott Tan Plaza and Grand Hyatt Singapore hotels, will He said he expected strong interest in Square.
Stephen Ng Tin Hui, Chairman of Wharf REIC (Getty Images)
Once the city’s premier destination, some of its early tenants, including fashion brands Hermès and Christian Louboutin, have moved to Liat Towers and ION Orchard, respectively. The current occupancy rate is 98.8%, and tenants include luxury electronics retailer Bang & Olufsen, furniture store Planet Plus, and brunch restaurant Wild Honey.
Market sources said Wharf Estate had been privately selling the property to prospective buyers for the past few years with an asking price of about S$500 million.
For the past two years, Scott Square has been losing foot traffic to the adjacent Grand Hyatt, which has been closed for renovations since October 2021 and is expected to reopen early this year. Just three years into operation, the mall has struggled to attract and retain quality tenants, and was described by The Straits Times as a “retailer exodus”.
According to Savills data, rents at Scotts Square are S$10 per sq ft, representing a 55 per cent discount compared to Orchard Area’s third quarter average of S$22.40 per sq ft.
Mr Lake said the mall’s rent could almost double to around S$19 per square foot if it attracted the right mix of tenants. He added that the mall’s net leasable area could also increase by 10 percent by reducing the size of hallways and common spaces.
The asset repositioning, which could cost around S$5 million, comes after a series of major projects are already scheduled, including the planned redevelopment of the Far East Shopping Center by Bright Ruby Resources and Ming. It will be in line with the ongoing revitalization of the Orchard area. Arcade along Cascaden Road.
As part of its latest master plan, Singapore’s URA will revitalize Orchard Road, Singapore’s traditional upscale shopping district, creating a green corridor lined with modern commercial projects and residential spaces, providing residents and He proposed a plan to make it more attractive to visitors. .
Downsizing in Singapore
Exiting Scotts Square will leave the 21-story Wheelock Place office and retail complex at 501 Orchard Road as Wharf REIC’s only asset in Southeast Asia’s wealthiest city.
The company acquired Scott Square and Wheelock Place from its Hong Kong parent company Wheelock & Company in December 2019 in a deal valued at HK$6.42 billion. The deal values Scotts Square at S$256 million, and if it were sold this year at the current guide price of S$450 million, the Wharf REIC would achieve a 76% appreciation in just over four years. become.
Mr Mintyandi understands that the company has no immediate plans to demolish Wheelock Place, which is located just a few blocks from the mall and currently serves as the headquarters of Wharf Estates Singapore.
The Scotts Square Expression of Interest campaign ends on February 6th.
The sales effort comes as Wharf REIC achieved a so-called “moderate recovery” by posting a net profit of HK$1.78 billion in the first half of 2023, after suffering a loss of HK$1.53 billion in the same period last year. It continues.