IOI Properties and CapitaLand Investment Enter Exclusive Due Diligence on One Raffles Place in a 50-50 Joint Bid

Lee spoke to The Business Times on the sidelines of the Forbes Global CEO Conference on 7 October. “Right now we have entered into exclusivity, and we are starting to do due diligence, and we are in the midst of discussing the final terms on the sales and purchase agreement,” he said. The joint-venture structure includes operational flexibility in case exit options are considered later, and a tag-along clause, as in other joint ventures.

Earlier reports put indicative pricing for the prime Central Business District property in the range of S$2.3 billion to S$2.4 billion. The purchase is part of a strategic push by the Malaysian developer to expand its Singapore commercial footprint beyond its current presence in Marina Bay and the Downtown Core.

One Raffles Place has two office towers, one of 62 storeys and the other of 38 storeys, and a six-level retail podium, with a total net lettable area of about 875,000 sq ft. It sits on four land parcels with different tenures: one plot has an 841-year leasehold that started in November 1985, while the other three have 99-year leaseholds, two starting in May 1983 and one in November 1985. Lee called the long leasehold tenure “almost equivalent to a freehold property”.

OUE Reit holds a 67.95 per cent effective interest through registered owner OUB Centre. UOB holds an 18.46 per cent beneficial interest, held in trust by OUB Centre, in which UOB owns a 10 per cent stake.

Long-term rejuvenation is being evaluated, but Lee said there is no fixed plan yet to redevelop the retail podium and Tower One. The first step after an acquisition would be to improve the tenancy mix in the podium, as he sees strong demand for retail space from the office crowd and a shortage of dining options.

IOI’s Singapore portfolio includes IOI Central Boulevard Towers, South Beach and Shenton House, and holds close to S$12 billion of prime Singapore office space. Lee said the group is planning to sell up to 40 per cent of its stake in IOI Central Boulevard Towers and the South Beach office tower, which together carry a valuation of around S$6 billion, to recycle about S$2.4 billion of capital. The stakes would probably go to private equity or sovereign wealth funds. Work began three to four months ago with DBS and Jefferies as main advisers, and the group is considering a Reit or a private fund, depending on market conditions. IOI’s debt has risen by 40 per cent over four years, and Lee said the game plan is “not just to acquire blindly”.

Rising prime office rents are lifting yields. At South Beach, office rents have climbed from about S$9 psf to about S$11 psf in two years, and the JW Marriott Hotel Singapore South Beach’s average daily rate has doubled from about S$400 to S$800. At IOI Central Boulevard Towers, rents are close to S$18 psf, from around S$8 psf when the site was bought in 2016.

For Shenton House, bought in 2023 for S$538 million under a private vehicle, IOI Properties agreed on 2 October to acquire the vehicle for S$1, also taking over S$217.06 million in shareholder advances and about S$376.23 million in debt. The rebuild is due to start in early 2027 and take three to five years from demolition to completion.

The group’s 683-unit W Residences Singapore Marina View, on a site bought in 2021 for S$1.5 billion, has sold 15 units at S$1.9 million to S$10.9 million since marketing began in 2025. With about 2 per cent of units sold, Lee said there is no intention to discount the rest and the group is prepared to hold unsold units and lease them to expatriates and foreigners.

Asked what the government could do, Lee said it should first remove the additional buyer’s stamp duty (ABSD) for foreigners, calling it “too punitive”. Foreigners buying any residential property in Singapore pay 60 per cent ABSD.