OCBC has put up for sale a 12-storey freehold office block at 110 Robinson Road, with an indicative price of S$45 million.

The price translates to about S$3,162 per square foot based on the building's net lettable area (NLA) of 14,233 square feet.

According to Cushman & Wakefield, which OCBC has appointed sole marketing agent for the sale of the property, the bank does not occupy any space in the building; instead it has leased out the space to tenants. Currently the occupancy rate is 76 per cent and the average passing rent on existing leases is about S$4.80 per square foot a month. Based on the property's current income, S$45 million price reflects a gross yield of 1.38 per cent.

However, there is upside for rental income from leasing out the vacant space as well as from achieving positive rent reversion for the space that is currently leased.

According to C&W's executive director of capital markets Shaun Poh, 110 Robinson Road's existing gross floor area (GFA) is estimated, but yet to be verified, at 22,123 sq ft - which reflects a plot ratio of 11.94. This exceeds the 11.2 plot ratio designated for the commercial-zoned site under Master Plan 2014. While the property does not have untapped GFA, there is scope to upgrade it through a major refurbishment exercise, and thereafter to achieve higher rentals, or even to do strata office sales. "The building could have just one strata title per floor given its small size," said Mr Poh. "We have also been approached by potential end-user buyers in the co-working space arena," he added.

The building was built in the 1980s. OCBC is divesting the asset as it does not use it for its own operations. Moreover it has received unsolicited offers, said Mr Poh. "At S$45 million, the deal size is very palatable; this should appeal to not only smaller institutional investors and corporate end-users but also high net worth individuals and boutique developers."

Market watchers suggest that 110 Robinson Road will be keenly eyed by the owners of the next door properties on either side - two offshore entities managed by Sin Capital Group which own Finexis Building at 108 Robinson Road; and Grace Global, which owns Robinson 112.

Mr Poh noted that the timing of the launch of 110 Robinson Road's tender is in tandem with the sudden surge in interest in Singapore office assets following the recent sales of Asia Square Tower 1 in Marina View (at S$3.38 billion or about S$2,700 psf on NLA) and the Straits Trading Building in Battery Road (at S$560 million or S$3,524 psf on NLA).

In early 2014, Sin Capital bought a half-stake in Finexis Building in a deal that valued the office block, which is also 12 storeys and freehold, at S$2,250 psf on the building's strata area of 53,830 sq ft, which is close to its total net lettable area.

Earlier, in late 2011, Sin Capital acquired its first 50 per cent in Finexis Building; that purchase valued the property at S$1,900-plus psf on strata area.

If either Sin Capital or Grace Global were to clinch 110 Robinson Road, they could do a major refurbishment or a redevelopment involving their respective property and 110 Robinson Road - to achieve a longer road frontage and a bigger floor plate.

The tender for 110 Robinson Road closes on July 26.