Orchard Road revamps with recent property sales

Delfi Orchard and Tanglin Shopping Centre were sold.

In the past two years, significant shifts have occurred along Singapore’s Orchard Road, marked by the sales of key properties such as Delfi Orchard, Ming Arcade, and Tanglin Shopping Centre. These sales signify a rejuvenation strategy for the area, poised to reshape its landscape and investment appeal.

Jeremy Lake, Managing Director of Investment Sales and Capital Markets at Savills, elaborated, "There has been a spate of collective sales along Orchard Road... These projects will be redeveloped over the next few years and will help to rejuvenate Orchard Road and to revitalise it, which is one of the objectives which the URA has stated publicly," said Lake.

Lake pointed out the differences in asset management and investment yields between the two, noting that retail properties often come with higher yields but require a more sophisticated management approach. 

"Retail shopping centres may be near four and a half percent... whereas office deals with property yields are lower, maybe around three and a half percent," Lake explained.

Moreover, Lake discussed the contrasting investment strategies between suburban and city retail properties. Unlike the redevelopment-focused purchases on Orchard Road, suburban malls are primarily acquired for their existing income potential, often yielding returns in the four to four and a half percent range initially, with the prospect of capital appreciation over time.

"Both [Ming Arcade and Tanglin Shopping Centre] were bought by the more ultra-high net worth private investors... They tend to attract the ultra-high net worth private investor who buys and intends to keep long term for wealth preservation," stated Lake. In contrast, institutional investors typically focus on shorter-term ownership with intentions centred around profit-making through strategic sales.