Allgreen Properties, part of Malaysian billionaire Robert Kuok’s Kuok Group, is said to be nearing a deal to buy 78 Shenton Way.

Market watchers expect the price to be in the low-S$600 million range.

Comprising two office towers, 78 Shenton Way has significant redevelopment potential under the Urban Redevelopment Authority’s (URA) Central Business District (CBD) Incentive Scheme.

The property is directly connected to the soon-to-open Prince Edward Road MRT station on the Circle Line.

It is held by a fund managed by PGIM Real Estate; the majority stake in the fund is said to be held by QuadReal, a global real estate investment, development and property management company headquartered in Vancouver, Canada.

The fund is seen exiting its 78 Shenton Way investment, which it entered into in 2018, at a loss. It is understood to have paid about S$700 million for the property, which it acquired from a fund managed by Alpha Investment Partners, now known as Keppel Fund Management.

Word on the street is that the PGIM-managed fund paid Alpha an initial S$680 million, followed by a further S$20 million after the planning authority’s approval was obtained within a stipulated timeframe for mixed-use redevelopment schemes proposed by Alpha that would result in enhancement of the site’s value.

The property has a 34-storey tower completed in 1988 and an 11-storey tower completed in 2009. It sits on a site with 99-year leasehold tenure from July 1983; this leaves a balance term of about 56 years.

The existing gross floor area (GFA) of 494,375 sq ft is 6.9 times the site area, which already exceeds the 5.6 plot ratio allotted to the commercial-zoned site under the URA’s Master Plan 2025.

Market observers say that under the CBD Incentive Scheme, a new project on the site could qualify for an increase in GFA of up to 25 to 30 per cent over the existing figure.

The maximum allowable increase in GFA is 30 per cent for a residential with commercial at first-storey project on the site.

Three other proposed use options under the scheme offer a maximum allowable intensification of 25 per cent. The first is commercial and residential; the second is hotel; the third is commercial with 40 per cent non-commercial uses, such as residential.

The third use option entails a mandatory long-stay serviced apartment component, where a minimum stay duration of three months is stipulated.

Tenants in 78 Shenton Way’s granite-clad Tower 1 include IPP Financial Advisers, Executive Ship Management, Bond Capital Partners and Green Needle Tech.

AIG is among the tenants in Tower 2, a glass-clad block.

The total net lettable area of 78 Shenton Way is 360,000-plus sq ft. It has 290 car parking spaces.