The 9th floor of Samsung Hub is selling at close to S$53.1 million. This amounts to S$4,050 psf for a strata area of 13,110 sq. ft. Does the development deserve the record breaking high price? Who is buying it? What is in store for the buyer?
A property and Construction Group, Lee Kim Tah is buying the 9th floor of Samsung Hub, a 30 storey building with 999 leasehold years. From the 8th floor right to the top are all office spaces. This is the first time an office floor in the Raffles Place financial district is selling at record breaking high of S$4,050 psf. This property gained a temporary occupation permit in November 2005.
Before this floor, Samsung Hub was entitled to another record breaking sale in February last year. Its 11th floor was sold at S$3,800 psf. Both these transactions have been conducted by Sun Venture Group. This time around, they surpassed their previous highest record price. Now selling the 9th floor at a new high of S$4,050 psf.
How does the buyer benefit from owning Samsung Hub’s 9th floor?
A rare find!
Office spaces already have limited supply in Singapore due to delayed completion and existing occupancy despite Covid. Moreover, Samsung Hub is one of the few 999 year leasehold/ freehold buildings in the Central Business District (CBD) of Singapore that offers strate offices to investors.
Scope for redevelopment
The 9th floor is currently leased to three tenants, one of which is Cushman and Wakefield. Their leases will expire within 2021 to 2023. The buyer will meanwhile occupy part of the floor. Eventually, the buyer can redevelop it for further expansion.
Decent net yield
Combined with the price and rental yield, the floor has a decent net yield at 2% range.
How is the current market position for office spaces in Singapore?
Covid has taken a toll on office supply and demand in 2020 and 2021. Mainly because many businesses are operating with work from home policy to curb the spread of the virus. Hence, the transaction amount in 2021 has declined to S$1.34 billion from 2.95 billion in 2020 and S$6.78 billion in 2019.
The sale faced most resistance in 2020 because corporates could not promise fixed leasing demand or rentals amid the uncertainty. They did not know when and how the office would be fully functioning again. Such lack of clarity led many sellers and buyers to hold back from making any major decisions.
However, things are turning around in 2021. Amid rolling of vaccines and better control of the pandemic, there are renewed positive sentiments regarding office spaces. Though many are still deciding how they should adapt to the hybrid working model, leasing activity of office properties are ripe.
New office development in 79 Robinson Road and CapitaSpring are moving forward with healthy leasing demand since the third quarter of 2020. Some tech and wealth management offices are even expanding thus relocating to new office developments. This is boosting absorption of secondary office stock.
Are there any vacant office spaces in Samsung Hub?
Sun Venture bought 4 floors in Samsung Hub – 8, 9, 10 and 11 from Ho Bee in August, 2010. They sold the 8th floor in 2015 at S$2,125 psf. Then, last year, they sold the 11th floor at S$3,800 psf and now the 9th floor at S$4,050 psf. Now, only the 10th floor of Samsung Hub is left. Seeing the current office property market condition, do you find it desirable to buy? If you need suggestions or consult an expert, don’t hesitate to drop a message here.
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