CapitaLand Investment and IOI Properties Close to Buying One Raffles Place for Just Under S$2.4 Billion

The Temasek Holdings-backed Singapore property asset manager and IOI are looking to form a joint venture to finalise a transaction for One Raffles Place. The property is likely to be sold for just under S$2.4 billion, one of the people said.

The development, comprising two office towers with 62 and 38 floors, along with a retail mall, is set to join a spate of commercial real estate assets changing hands as the market revives, supported by low borrowing costs and sellers’ greater willingness to be flexible on pricing.

OUE Reit, a real estate investment trust backed by the wealthy Indonesian Riady family, controls a firm that owns an 81.54 per cent interest in the property. Developer UOL Group, Khattar Holdings and UOB have minority stakes in the holding company. UOB also holds the remaining 18.46 per cent in the complex and occupies space in it. The lender and UOL are backed by Singapore’s billionaire Wee family.

The sellers were initially looking to sell the development for as much as S$2.5 billion, the person added. One Raffles Place was worth S$2.37 billion based on a valuation of the stake the Reit controls at the end of 2025. It has 702,980 square feet of lettable space.

People familiar with the matter have previously cited challenges in selling the asset, saying the earlier pricing was seen as high because an acquisition of the complex will likely involve more capital outlay for redevelopment.

The buyers are exploring a partial redevelopment of the complex although UOB will retain space it occupies in it after the complex’s sale, a person familiar with the latest deal discussions pointed out.

Most of the complex dates back to the 1980s but only one of its towers and part of its retail space have long-term leasehold tenures lasting for centuries. The other tower and 75 per cent of the retail space have tenures that will expire by the 2080s.

This tenure structure is a key consideration for any redevelopment plans, as it affects the long-term value that can be extracted from different components of the complex.

Singapore has seen a return of large-scale real estate transactions. After a record US$10 billion of deals for commercial real estate in the first half, more in the pipeline could push the city-state beyond a high last seen in 2019, data provider MSCI said in a recent report.

The revival is supported by low borrowing costs and sellers showing greater willingness to be flexible on pricing, creating conditions for landmark assets to change hands after a prolonged period of subdued activity.