OUB Centre to get $540m adjacent office tower

Source : Business Times - 26 Sep 2008

Development will add 350,000 sq ft of prime Grade A space in 2011

UNITED Overseas Bank and OUB Centre will invest $540 million to jointly develop a new commercial tower in the heart of Raffles Place.

The 38-storey development will take shape next to the existing OUB Centre tower and retail mall. The three components will together be known as One Raffles Place.

Due for completion in 2011, the tower will provide 350,000 square feet of prime Grade A office space.

The site has a remaining tenure of around 75 years but there are plans to top this up to 99 years.

The $540 million investment excludes land cost and will be financed through syndicated loans from several financial institutions.

OUB Centre, which counts Overseas Union Enterprise, UOL Group and the Kuwait Investment Office among its shareholders, owns an 81.54 per cent stake in the partnership.

An anticipated economic slowdown and the US financial turmoil have affected outlook for the office property sector.

UBS Investment Research said in a report on Tuesday that demand for office space could weaken in the next 12 months as global financial institutions consolidate.

Prime office rents could be down as much as 47 per cent in 2012, it said.

But such forecasts have not dampened OUB Centre’s confidence in the new tower.

‘This is a long-term investment,’ said its general manager, Henry Kok. ‘This tower marks another milestone and reflects our confidence in Singapore’s growing business scene and this location.’

Marketing of the new building has started and target tenants include financial institutions and multinational companies.

Despite on-going consolidation within the financial sector, Mr Kok pointed out that ’some financial institutions are expanding quite aggressively . . . the gravity is slowly shifting to Asia’.

The new tower and the existing OUB Centre building will offer 760,000 sq ft of prime Grade A office space in total.

The OUB Centre building is near full occupancy and rents range from $17.50 to as close as $20 psf per month, Mr Kok said.

The principal architect for the new tower is Paul Tange, president of Tokyo-based architectural firm Tange Associates.

He is the son of Kenzo Tange, who designed the original OUB Centre tower more than 20 years ago.