HONG Realty, a privately held vehicle of the Hong Leong Group, is making a handsome gain from the sale of an office floor at Suntec City which it bought less than two years ago.

The company is selling Level 10 of Suntec Tower One for S$37.1 million to a Singapore-incorporated vehicle controlled by the Hong Kong-based Rosa family, which founded Rosa Securities.

The price is about S$7.6 million or 26 per cent higher than the S$29.48 million that Hong Realty paid for the space which it bought in 2018 from mainboard-isted IFS Capital.

The price under the latest deal works out to S$2,580 per square foot on the strata area of 14,381 sq ft. The 45-storey Suntec Tower One is on a site with a 99-year leasehold tenure that started on March 1, 1989; about 68 years remain on the lease.

IFS Capital's sale price to Hong Realty worked out to S$2,050 psf.

The Hong Leong Group is controlled by the Kwek family.

Some market watchers noted that the S$2,580 psf in the latest deal is close to the price for a bulk sale of office floors at Suntec City last year.

In that deal, a fund managed by ARA Asset Management sold Levels 24, 25, 34, 35 and 36 of Suntec Tower One, along with the fourth floor of the adjacent Suntec Tower Two, for a total of about S$160 million or an average price of around S$2,600 psf on the total strata area of 61,667 sq ft. The new owner of the space is a fund managed by Alpha Investment Partners.

That deal was through the sales of shares in companies that own the office space and not captured in the URA Realis caveats database.

Going by the transactions for which buyers did lodge caveats and are reflected in Realis, prices of office deals at Suntec City last year ranged from S$2,150 psf for a 2,142 sq ft unit on the fourth floor of Tower One to S$3,297 psf for a 2,336 sq ft unit on Level 36 of Tower Three.

Hong Realty is said to have signed up a tenant for the entire 10th floor of Tower One under a long lease. The rental income reflects a net yield of about 3.4 per cent on the sale price.

Property consulting group CBRE represented Hong Realty in the sale of the space. When contacted, the firm's senior executive director and head of capital markets, Michael Tay, said that in the past six months there has been an influx of foreign investors - including high net worth individuals and family offices from Asia and Europe - keen on buying Singapore real estate.

Most would eschew the residential market given the punitive additional buyer's stamp duty (ABSD) on foreigners and companies buying Singapore residential property.

"As a result, we have seen some investors giving attention to strata offices as well as conservation shophouses on sites fully zoned commercial - as there is no ABSD.

"Moreover, strata offices offer stable net yields of 3 to 3.5 per cent. While yields are more compressed for CBD conservation shophouses, investors are still drawn to them as they are in relatively scarce supply, which bodes well for mid- to long-term gains in capital values," said Mr Tay.

The improvement in quality of these shophouses due to refurbishment has resulted in stronger quality tenants from a diverse range of uses from trendy F&B establishments to offices to hotels, he added.

Meanwhile, BT understands that a deal is in advanced stages of being stitched for a row of six shophouses along Peck Seah Street near Tanjong Pagar MRT Station. According to the grapevine, the price is expected to be about S$54 million. The property is being sold by a fund managed by Hong Kong-based private equity real estate firm Phoenix Property Investors.

The buyer is expected to be leading global asset manager Aberdeen Standard Investments, which is close to concluding due diligence for the asset. Aberdeen Standard Investments is the investment arm of Standard Life Aberdeen, which was created in 2017 from the merger of Standard Life and Aberdeen Asset Management.

Phoenix Property Investors acquired the shophouses, at 48 to 56 Peck Seah Street, for S$42.8 million in late 2014 from the Singapore unit of Japanese shipping line K Line and spent a further S$2 million refurbishing them. This was completed in September 2015.

Spanning two storeys and an attic level, the six conservation shophouses have a total existing gross floor area of 19,938 sq ft. They have a combined land area of 8,213 sq ft with 99-year leasehold tenure from May 1994, leaving a balance of 73 years. The property is on land zoned for commercial use under Master Plan 2019.

The asset is fully leased; the biggest tenant is kitchen and bathware brand Kohler. Another key tenant is Fat Prince restaurant.

The existing leases for the asset still have some time to run and the rental income translates to a gross yield of above 3 per cent.

JLL and Colliers International conducted an expression of interest exercise for the property on behalf of Phoenix Property Investors; that exercise closed last October.

Sakal Real Estate Partners is understood to have introduced the buyer.