Complete Property Market Updates of Singapore

April 30, 2008

UOB-Kay Hian to build site for own use

Filed under: 1 — Propertymarketupdates @ 4:49 am

INVESTMENT house UOB-Kay Hian will develop the Scotts Road/Anthony Road site which it clinched this week for its own use, a senior company official told BT yesterday.

‘It will be our new office when fully developed,’ said Esmond Choo, the company’s executive director. ‘It will give us some 140,000 square feet of office space, which should be sufficient to house our 2,500 staff. The location is a nice, upmarket area, near the MRT station and next to the prime shopping and hotel areas.’

UOB-Kay Hian beat out seven other bidders with its record $34 million tender for the 15-year-lease site this week. This works out to $242.5 per sq ft for the 93,461 sq ft plot – double original estimates by property market insiders.

UOB-Kay Hian’s bid was also some 11 per cent more than what had been paid for the first transition office site in Newton in August 2007.

Asked why UOB-Kay Hian paid record prices for a 15-year-lease property, Mr Choo said: ‘We see the office rental market continuing to tighten up and rentals trending up in the foreseeable future. So we decided to take ourselves out of the equation. This way, we will not face major disruptions and it will give us more predictability in terms of our operating costs.’

Rentals in the prime Raffles Place area, where UOB-Kay Hian has its 100,000 sq ft office, averaged over $15-18 psf amid continuing tightening in the office space supply market through the first quarter. This is much higher than the $6-8 psf monthly gross rent commanded in the Scotts Road area.

UOB-Kay Hian itself is said to be paying around $10 psf despite operating out of its parent UOB’s premises. But Mr Choo added that UOB-Kay Hian would keep its outlay on the new property within reasonable limits, bearing in mind that it would be a transitional office with a relatively short lease.

‘We expect to spend about $200 psf to develop it into a nice low-rise office headquarters housing our entire operations,’ he said. ‘It will be a nice, comfortable, efficient and attractive glass-and-concrete building.’

Mr Choo did not say what the company would do after the 15-year lease is up.

Source : Business Times – 26 Apr 2008

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