A share purchase agreement completed in 2011 saw a 50% stake in Robinson Land sold to an offshore fund controlled by a select group of high net worth investors. Robinson Land had as its sole asset the 12-storey Finexis Building on Robinson Road in Singapore. The size of the transaction was calculated based on the latest valuation of the property, which stood at $110 million at the time of the sale. This equates to $2,043 per square foot of office strata across a total strata area of 53,830 square feet, thought to be close to the net lettable area of the building.
The half stake in Robinson Land was sold by the Buxani-CMG partnership, which has successfully acquired several prime properties in Singapore since 2006. The partnership comprises a group of offshore investors advised by fourth-generation Seychellois Mukesh Valabhji of Capital Management Group, and former Goldman Sachs banker and real estate investor Kishore Buxani.
The largest acquisition deal made by the partnership in Singapore to date was the purchase of 26% of the Samsung Hub building on Church Street in 2007 – six entire floors of the Grade-A strata titled 999-year leasehold office development. Many of these office units have since been sold on by Buxani-CMG at a profit. Kishore Buxani has been investing in the commercial real estate market in Singapore since leaving Goldman Sachs in 2005. Mukesh has a number of business interests across the world including the Seychelles cable television company Intelvision and numerous resort and commercial property investments.
The Finexis Building is located at 108 Robinson Road in Singapore. Robinson Road is a major trunk road located deep within the central business district of Singapore and flanked by skyscrapers on both sides. The Finexis Building was initially purchased by the Kishore Buxani/Mukesh Valabhji partnership in 2006 for $48 million, and since that time a further $6 million has been spent on modernisation and refurbishment. Over 82% of the floor space in the building was let at the time of the latest deal, with five floors occupied by anchor tenant Finexis Advisory. Other tenants include the Australian companies Box Hill Institute and Cliftons, and Melior International College, which has links with CQ University in Australia.
The land area of the Finexis Building is 5,549 square feet, with a gross floor area of 64,766 square feet – 11.67 times the land area. This exceeds the maximum plot ration for the site, which is currently set at 11.2 times the land area. The freehold tower did not at the time of the deal have any immediate potential for redevelopment. Rental prices for office space within the Finexis Building for existing contracted tenants remains at approximately $5.60 per square foot per month, while new tenants in the latest rental transactions are being charged $7. The net yield, assuming a valuation of $110 million and a rental rate of $7 per square foot per month, works out at 2.9%.
Commercial Real Estate Investment in Singapore
Singapore is currently drawing in investors from across the world. Recent cooling measures put into place by the government have caused many prominent investors to switch their real estate portfolio from residential to commercial properties, offering high yield and capital gain. Incentives include no capital gains tax, a good exit strategy, no seller stamp duty or additional buyer stamp duty, and loans of up to 80%.
In 2011 Singapore was rated as the top investment market for real estate in the Asia-Pacific region, in a forecast published jointly by PwC and the Urban Land Institute. More recent forecasts predict that rents on premium office space in Singapore are likely to rise by as much as 15% over the course of 2015. The country scores consistently high in the rankings of easiest places to do business and has been attracting start-ups and expansions for some years, with businesses choosing Singapore as a strategic hub for global expansion. Low levels of corruption, stable government and financial incentives combine to make Singapore an attractive opportunity for real estate investors – particularly those looking at commercial properties. Start-ups in Singapore are also protected by intellectual property laws upholding the very highest standards.
Investors such as Mukesh Valabhji and Kishore Buxani focus on the acquisition of prime commercial properties within Singapore, creating value through tenant remixing, asset refurbishment and repositioning. The partnership retains a 50% stake in Robinson Land Pte Ltd, and by extension the Finexis Building.