April 3, 2024
OCBC is said to be exploring a redevelopment of its Chulia Street property, which sits on more than 120,000 square feet of land in Singapore’s central business district.
Under Singapore’s current banking regulatory framework, banks are barred from engaging in property development. OCBC would probably have to transfer the Chulia Street property to a partner that will redevelop it. After the project is completed, the partner would then transfer the asset back to OCBC.
As reported, a possible redevelopment plan being considered for the Chulia Street asset includes office, retail and hospitality components. Market observers suggest that the redevelopment of OCBC’s Chulia Street property could take place under the Urban Redevelopment Authority’s (URA) Strategic Development Incentive (SDI) scheme.
Located in Singapore’s financial district, the landmark OCBC Centre, designed by renowned architect IM Pei and completed in 1976, comprises a 50-storey tower and a carpark block (with six storeys and two basement levels). OCBC’s head office is located in the tower.
The bank went on to develop two extensions: OCBC Centre South, a seven-storey building with a basement completed in 1985, and the 15-storey OCBC Centre East, completed in 1996.
Should the bank decide to conserve OCBC Centre, it is likely to be given more incentives by the authorities. However, a complete redevelopment of all three buildings will allow greater efficiency, such as providing larger office floors of about 30,000 sq ft. This would better suit big occupiers, including OCBC itself and potential office tenants for the remaining offices in the redevelopment scheme.
While banks here are barred from undertaking property development, they may hold properties for investment purposes. However, the aggregate value of the permitted property holdings is limited to 20% of a bank’s capital funds. Certain properties, such as those used for the bank’s business premises, are excluded from this limit.
It was reported that OCBC has appointed JLL as exclusive adviser for its plan to redevelop the three buildings. The new complex could potentially yield 450,000 sq ft of additional space, on top of the combined 1.35 million sq ft of GFA in the existing structures.
According to JLL, average office rents in Singapore’s central business district rose to an average of S$11.42 psf in the first quarter, to reach their highest level since the fourth quarter of 2008.
OCBC is understood to be looking for an office of 300,000 to 400,000 square feet which it could use as a temporary base during the redevelopment.