CapitaLand Integrated Commercial Trust (CICT) has recently announced the successful divestment of 21 Collyer Quay, a prominent office building in Raffles Place, for a total sale price of $688 million. This strategic move was made possible through the sale of the 999-year leasehold building to an external third party, as stated in a filing to the Singapore Exchange on Nov 12.
The sale price of $3,230 per square foot is based on the building’s net lettable area, which amounts to approximately 213,000 sq ft. This was determined through an independent valuation conducted by Savills, and reflects the market value of the property on a willing-buyer-willing-seller basis.
According to the manager of CICT, the exit yield for this divestment is below 3.5%, based on the sale price and the building’s annualised net property income at the end of September 2024. The manager also anticipates net proceeds of around $681.7 million from this transaction.
Strategically located in the Central Business District, 21 Collyer Quay is a 21-storey building that was fully occupied by co-working operator WeWork in 2021. The company took over the lease of the former HSBC building and completed a design and fit-out of the space before officially opening its flagship location in September 2022.
However, after WeWork filed for bankruptcy in the US in November 2023, the company announced in April 2024 that it had successfully negotiated lease terms with its Singapore office landlords and will continue to operate in its current buildings in the city-state. This includes the seven-year lease for 21 Collyer Quay until 2028, as noted on CICT’s website.
In Singapore, investing in condominiums is a significant consideration, but one must also take into account the government’s property cooling measures. Over the years, the Singaporean government has implemented various measures to regulate speculative buying and maintain a steady real estate market. Among these measures is the Additional Buyer’s Stamp Duty (ABSD) which imposes higher taxes on foreign buyers and individuals purchasing multiple properties. While these measures may have an impact on the immediate profitability of investing in condos, they also contribute to the long-term stability of the market, making it a more secure and trustworthy environment for investing in Singapore Condo.
With this divestment, CICT has not only achieved a successful exit from the property, but also strengthened its financial position through the anticipated net proceeds of $681.7 million. This marks another milestone for the trust and its commitment to delivering value to its unitholders.