Collective sale of Concorde Hotel and United House set to revive the corner of Orchard Road

Four decades ago, when French department store Printemps opened its 4,000 sq m (43,0056 sq ft) flagship on the first level of the former Le Meriden Hotel, it was a novelty and drew crowds. It became one of the most vibrant malls along Orchard Road. However, it was short-lived. Having opened in September 1983, Printemps closed six years later in December 1989. The developer and owner of Le Meridien Hotel, Richland Development, fell into financial difficulties and was placed in receivership. The hotel was acquired by property tycoon and hotelier Ong Beng Seng of Singapore-listed Hotel Properties (HPL) in 1988. Twenty years later, in 2008, the hotel was rebranded as Concorde Hotel, and the mall became the strata-titled Concorde Shopping Centre. That corner of Orchard Road could soon get a new lease of life with the Concorde Hotel and Shopping Centre up for collective sale. The guide price of $820 million includes bonus gross floor area (GFA) from balconies and a lease top-up premium of $213.1 million. It translates to a land rate of $1,801 psf per plot ratio (ppr). Read also: HPL's Concorde Hotel & Shopping Centre is up for en bloc sale at $820 mil Advertisement Advertisement HPL owns the 407-room Concorde Hotel, which spans the fourth to ninth floors of the building, as well as 63 (64%) of the 98 strata shops in the three-storey retail podium, which has a total strata area of 108,510 sq ft. Launched on Sept 3, the collective sale has drawn the interest of mainstream property groups with hospitality expertise searching for redevelopment opportunities along the city’s most famous shopping street.

‘Sweeping view’

For the past month, Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore, who is handling the sale of Concorde Hotel & Shopping Centre, has conducted numerous site inspections, which usually conclude with a visit to the rooftop. Before these rooftop visits can take place, the management office has to call the Istana security officers next door to seek their clearance. “Except for the view of the Istana, which is likely to require some screening, you have a sweeping view of the greenery and unobstructed views of Suntec City, the Raffles Place and the Marina Bay skyline from the rooftop,” says Lake. “Most people do not expect that and are very pleasantly surprised by the view.” Buildings that overlook the Istana must incorporate design features that shield them from view. The developer can choose to use frosted glass, similar to VisionCrest Residences or fins on the façade, like the UBS Building on Penang Road. The developer can choose to use frosted glass, identical to VisionCrest Residences or fins on the façade, like the UBS Building on Penang Road. Concorde Hotel sits on a 99,623 sq ft plot with a 170m frontage along Orchard Road — one of the longest along the premium shopping boulevard, second only to Ngee Ann City. As an island block, it has road frontages on all sides — Orchard Road, Cavenagh Road, Kramat Lane, and Buyong Road. Advertisement Advertisement

Price differential

The site is currently zoned as a hotel, but outline planning permission was obtained on Oct 8 for the site to be redeveloped into a mixed-use project with 40% hotel, 40% residential and 20% commercial components. It is conditional on the developer paying the $213.1 million for the lease top-up to a fresh 99 years. The closing date for the collective sale of Concorde Hotel and Shopping Centre has been extended to Nov 6, from Oct 16 before. Apart from Concorde Hotel’s site attributes, its land rate of $1,801 psf ppr is a 40% discount to freehold or 999-year leasehold plots on Orchard Road that have been priced above $3,000 psf ppr. Lake says the price differential between a 99-year leasehold and a freehold site is typically about 10% to 20%. “Freehold sites on Orchard Road tend to attract private wealth and high net worth individuals who want to hold the asset for the long term,” Lake observes. “It’s unlike Concorde Hotel, which is more attractive to mainstream developers with a buy-to-sell business model.” Sitting directly behind the Concorde Hotel and connected to it by a pedestrian linkway on the second level is the freehold commercial building United House. It fronts Kramat Lane, which runs parallel to Orchard Road. Launched for sale on Oct 2, it marks the first collective sale attempt by the owners of United House. The reserve price of $166 million works out to $3,025 psf ppr if the property is redeveloped into a new 10-storey commercial building with a gross floor area of 62,900 sq ft. Advertisement Advertisement If it is redeveloped into a new hotel, subject to planning approval, the land rate will be $3,318 psf ppr. A planning application for hotel use with a plot ratio of 4.9 has already been submitted and is currently pending approval from URA. The tender will close on Nov 14. “United House’s launch comes at a pivotal time, as Orchard Road is undergoing exciting transformation into a thriving lifestyle destination,” says Swee Shou Fern, head of investment advisory at Edmund Tie, who is handling the sale. Interest in Orchard Road has also been keen, following the government’s plans to rejuvenate its premium shopping street. Next year, the traffic on Orchard Road in front of Concorde Hotel will be diverted to Penang Road. An entire 500m stretch of Orchard Road between Buyong Road and Handy Road will be pedestrianised. Istana Park will be expanded and integrated with the neighbouring Penang Road Open Space, including the carpark and Dhoby Ghaut Green. Along the way, there will be themed gardens, such as the Orchid-themed garden to attract butterfly habitats, activity spaces and nature play gardens. People can walk amid greenery from the Concorde Hotel to Dhoby Ghaut MRT Interchange Station or all the way down to The Cathay.

SDI Scheme being reviewed

The Strategic Development Incentive (SDI) Scheme, which URA rolled out in the Master Plan 2019, is now being reviewed for the upcoming Master Plan 2025. One of the existing SDI requirements was that the redevelopment proposal must have a minimum of two adjacent sites unless the single site proposal can demonstrate a positive impact towards the rejuvenation of the street block or precinct. An example is Faber House, which UOL Group is redeveloping into a 250-room hotel under the SDI Scheme. “The requirement to have two adjacent property owners propose a redevelopment scheme may have deterred developers from pursuing the SDI,” says Alice Tan, Knight Frank Singapore’s head of consultancy. “Such a partnership of two owners can be possible if the property owners are from the same entity, or both individual owners share similar goals to rejuvenate their properties as well as the surrounding precinct,” notes Tan. URA rolled out the SDI at the same time as the CBD Incentive (CBDI) Scheme to encourage rejuvenation of the CBD in the Master Plan 2019. URA is currently reviewing both schemes.

More owners seeking to sell

“As the rejuvenation of Orchard Road remains a key focus, it would not be surprising if revisions or enhancements to the SDI scheme are considered, potentially providing further opportunities for properties in this area,” adds Swee. Market sentiment has improved since the US Federal Reserve cut the interest rate by 50 basis points (bps) on Sept 19. “The interest rate cut was no surprise, given that it was well telegraphed to all of us progressively over the year,” says Lake. In addition to the 50 bps cut, further cuts are anticipated in the coming year. “Together, that would start to have a material impact on the financial calculations of investors,” he notes. “It may help reduce the price gap, which is an unfortunate feature of the current market.” More owners are now seeking to sell their properties. “Quite a few owners have pulled the trigger rather than just flirting around with the idea of selling the property like they had in 2023,” he says. Perhaps this could spur more collective sales, he adds.