City Developments Ltd. (CDL), under the leadership of billionaire Kwek Leng Beng, is increasing its asset divestments by putting an aging retail mall located in the Orchard Road shopping strip up for sale. The company, along with other owners of the 11-story Delfi Orchard commercial and residential property, has set a reserve price of S$438 million ($322 million) for the sale. CDL owns 126 of the 150-strata titled units at Delfi Orchard, according to its annual report. This move comes as CDL aims to raise S$1 billion this year from asset divestments to reduce its gearing and increase profitability.
This is the second property that City Developments has put up for divestment this year, following the sale of 65 luxury apartment units at The Residences at W Sentosa by its subsidiary Cityview Place Holdings. CDL still holds 138 units in the 228-unit development that it built in 2011. The company is facing challenges in profitability, with its net profit plummeting 75% to S$317 million in 2023 due to high-interest rates and a global property downturn. Asset divestments are seen as a strategic move to weather these challenges and strengthen the company’s financial position.
Delfi Orchard, sitting on a 20,264 square feet freehold site, has the potential to be redeveloped into a commercial property of up to 20 stories high with a built-up space of 131,186 square feet, as stated by Savills Singapore, the sole marketing agent for the sale. The prime location of Delfi Orchard at the gateway of Orchard Road presents a rare opportunity for developers looking to acquire a premium redevelopment site in a coveted area. The rejuvenation of Orchard Road is ongoing, with various developers putting forward plans to transform aging buildings in the area in line with the government’s aim to revitalize the precinct.
Tycoon Ong Beng Seng’s Hotel Properties intends to redevelop the voco Orchard hotel, along with two adjoining properties, into a massive mixed-use complex encompassing a hotel, office space, retail outlets, and residential units. The estimated cost of this redevelopment project is as high as S$2 billion. Royal Group, controlled by Singapore billionaire Asok Kumar Hiranandani, is also transforming the Ming Arcade, a dilapidated shopping mall on Cuscaden Road near Orchard Road, into a boutique hotel. Indonesian tycoon Sukanto Tanoto plans to redevelop the Tanglin Shopping Center, purchased by Pacific Eagle Real Estate for S$868 million in 2022, in a similar endeavor.
The rejuvenation efforts in Orchard Road have attracted significant interest from developers and investors seeking to capitalize on the potential for growth and revitalization in the area. Various projects aimed at transforming aging properties into modern, mixed-use complexes are in the pipeline, indicating a positive outlook for the future of Orchard Road as a vibrant commercial and residential hub. The proposed sale of the Far East Shopping Center for S$910 million to Chinese steel tycoon Du Shuanghua, however, fell through after regulatory hurdles prevented the construction of a larger commercial property on the site.
Despite this setback, the overall trend of redevelopment and revitalization in Orchard Road signals a promising future for the iconic shopping district, with potential for further growth and transformation in the years to come. City Developments Ltd.’s decision to divest assets and capitalize on the opportunities presented by the evolving landscape of Orchard Road reflects a strategic approach to navigating challenges and positioning the company for long-term success in a competitive real estate market.
