38-storey tower to rise at Raffles Place

Source : Straits Times - 26 Sep 2008

New development will cost $540m and is due to be completed in 2011

A NEW office block will soon come up next to OUB Centre, with the two buildings to be packaged in a single prime development called One Raffles Place.

The tower, due to be completed in 2011, will offer 350,000 sq ft of top-quality Grade A office space and five floors of shops, said OUB Centre Limited, which is developing the 38-storey building along with United Overseas Bank (UOB).

Although none of the space has yet been leased, the company is not too concerned about securing tenants despite a large supply of new offices looming over the market next year and beyond.

‘This development is a long-term investment, we are confident of the location and the address, and we are confident of Singapore’s economy,’ said OUB Centre general manager Henry Kok yesterday.

Even amid the financial turmoil, Singapore office space is still in demand, added Mr Chris Archibold, regional director and head of markets at Jones Lang LaSalle (JLL), one of the building’s leasing agents along with CB Richard Ellis.

‘We are still seeing quite a number of expansions in the financial services industry, jobs being relocated to Asia out of Europe and the United States.’

The new block will cost $540 million to develop, which will be financed by a syndicated loan from financial institutions, said Mr Kok. OUB Centre’s shareholders are Overseas Union Enterprise, UOB, UOL Group, Khattar Holdings and the Kuwait Investment Office.

While none of the parties involved would reveal expected rents for the new building, JLL’s managing director for Singapore and South-east Asia, Mr Christopher Fossick, said rents would be pegged to the ‘market rate’ for Raffles Place.

Asking rents for Grade A offices in the area, including at the existing OUB Centre, are roughly between $17.50 and $18.50 per sq ft (psf), said Mr Donald Han, managing director of property consultancy Cushman & Wakefield.

But he said rents for the new tower will ‘have to reflect the expected market situation in 2011, given the supply coming onstream in 2010 and beyond’.

However, with the building’s high specifications, he still expects rents to be ‘near the top of the range’.

‘There will always be a demand for buildings like the new OUB tower, as the Raffles Place location will be the first stop for companies moving to Singapore.’

Other new upcoming offices in Raffles Place include the 28-storey Straits Trading Building in Battery Road, whose redevelopment will be completed by this year, and Ocean Building in Collyer Quay, due for completion in 2011.

The OUB tower, with smaller floor plates of 11,000 sq ft, will target tenants with smaller space requirements, said Mr Fossick. ‘There’s been an enormous explosion of hedge funds, investment management groups and private banks, who take 5,000 sq ft to 20,000 sq ft of space.’

In an interesting twist, the new tower is being designed by Japanese firm Tange Associates’ Paul Tange, the son of Mr Kenzo Tange, who designed the original OUB Centre more than 20 years ago.