Scotts Square mall for sale at $450 mil

/ EdgeProp Singapore |

January 5, 2024 1:04 PM SGT

The $450 million guide price for Scotts Square works out to $3,438 psf ppr based on gross floor area (Photo: Savills Singapore)

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Situated between the Grand Hyatt Singapore and Singapore Marriott Tang Plaza hotels, Scotts Square is a mixed-use development with a prominent location near the Scotts Road and Orchard Road intersection.

Developed by Wharf Estates Singapore (formerly Wheelock Properties), the freehold Scotts Square was completed in 2011. It has two luxury residential towers of 43 and 34 storeys with a total of 338 apartments and a retail podium. The retail space spans four storeys, from Basement 1 to Level 3, and has a gross floor area (GFA) of 130,875 sq ft.

La Savoir, a French-inspired café that opened in March 2023 (Photo: Savills Singapore)

Since the Covid-19 pandemic, new F&B outlets have set up shop at Scotts Square, including Eggslut (opened in September 2021), Tiong Bahru Bakery (November 2021) and La Savoir, a French-inspired café (April 2023).

New retail tenants include Bang & Olufsen, which opened its gallery on the first level of Scotts Square in September 2022, and Planet Plus, which took up the entire open space on the second level in mid-2023. A lifestyle retailer, Planet Plus sells furniture and home accessories. Within the retail space is the Planet Plus Café. Meanwhile, golf retailers have taken up space on the third level, and the largest is MST Golf, which opened in December 2022.

Planet Plus furniture and home accessories store occupies an open space on the second floor (Photo: Savills Singapore)

Rental enhancement

The net lettable area (NLA) of the mall at Scotts Square is 76,657 sq ft, and the space is 98.8% occupied. However, the existing rent is averaging less than $10 psf.

Located at 6 Scotts Road, Scotts Square is now on the market by expression of interest (EOI) with a guide price of $450 million, which translates to $3,438 psf ppr based on GFA.

Lake: There's a lot of potential for curating the right tenant mix and repositioning the space into a boutique luxury retail destination (Photo: Samuel Isaac Chua/EdgeProp Singapore)

“A sale now is very timely for buyers to ride on the rejuvenation of Orchard Road, particularly as visitor arrivals to Singapore are increasing rapidly, and more visitors from China are expected in 2024 with the 30-day visa-free travel to start soon,” says Jeremy Lake, managing director of investment sales & capital markets at Savills Singapore, the exclusive marketing agent for Scotts Square.

According to Lake, most prime Orchard Road buildings are owned by REITs, large developers and a few private owners who typically do not sell their properties. “The opportunity to buy a freehold flagship retail property is very rare, and we expect strong interest from buyers,” he adds.

The mall has slab-to-slab ceiling height of 5.4 to 5.8m per floor (Photo: Savills Singapore)

Lake says there is significant potential to increase the NLA at Scotts Square by at least 10%, which can be done by improving the layout and reducing the corridor width to give the stores greater visibility. “Curating the right tenant mix and repositioning the space into a boutique luxury retail destination would attract luxury fashion designers, watch and jewellery brands, and possibly a Michelin-starred restaurant occupying part of the third level,” he adds.

After repositioning the mall, Lake estimates that the purchaser can expect a net yield of 3.6%, assuming “a blended average rent of $19 psf”.

An F&B tenant that has been there since 2012 is the all-day-brunch restaurant Wild Honey on the third floor (Photo: Savills Singapore)

Potential for more F&B, repositioning of asset

Based on the existing tenant mix, F&B accounts for just 29% of the NLA at Scotts Square. An F&B tenant that has been there since 2012 is the all-day-brunch restaurant Wild Honey on the third floor. London Fat Duck opened in the basement in 2015, while Pizza Express opened in 2016. Paradise Teochew took over the space formerly occupied by Crystal Jade on Level 3 in 2016.

Lake reckons the F&B component of Scotts Square could be increased to 40%, but that depends on the new owner’s vision and repositioning of the mall, he says.

Eggslut opened at Scotts Square in September 2021 (Photo: Savills Singapore)

In most prime malls, F&B makes up 48% of the stores. “F&B can be a footfall magnet and contribute to a mall’s experiential offering,” says Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, in his 2024 market outlook report. Landlords are exploring converting vacant retail spaces to F&B use, he adds.

Orchard Road is also where international brands want to have a presence. Lake sees Scotts Square’s double-volume glass façade and 50m frontage as an ideal advertising space.

Orchard Road is also where international brands want to have a presence - Apple and Adidas have their flagship stores at Knightsbridge mall along prime Orchard Road (Photo: EdgeProp Singapore)

Brands like Apple and Adidas have flagship stores at Knightsbridge, the retail mall linked to Pullman Singapore Orchard, which sits at the junction of Orchard Road and Bideford Road. Nike is expected to open a flagship store next door at 268 Orchard Road.

The existing Scotts Square development has “good bones”, says Lake. With a squarish layout, an entrance atrium with triple-volume ceiling, and a slab-to-slab ceiling height of 5.4m to 5.8m for every floor, Lake estimates a budget of $5 million for the repositioning works.

The exclusive covered drop-off point for the luxury residences and mall at Scotts Square (Photo: Savills Singapore)

Scotts Square has two entrances: a generous pedestrian walkway and access from the front and a sheltered drop-off point for cars at the rear entrance. “If you want to cater to a ‘tai tai’ clientele, having an exclusive covered drop-off area is an advantage,” says Lake. A dedicated car park for the mall is in Basement 2, with parking space for 88 cars and five motorcycles.

The triple volume front entrance of Scotts Square mall (Photo: Savills Singapore)

Increased connectivity

When the mall was built, the developer had already built a partition wall that could be knocked down to create an underground link to Tang Plaza and Orchard MRT Station.“It’s part of URA’s desire to increase underground connectivity between malls along the Orchard Road corridor,” says Lake.

The rejuvenation of Orchard Road, part of URA’s 2019 Master Plan, is underway, emphasising placemaking and increasing connectivity between buildings.

When the mall was built, the developer had already built a partition wall that could be knocked down to create an underground link to Tang Plaza and Orchard MRT Station (Photo: Savills Singapore)

Scotts Square is a one-minute walk across the road to the pedestrian underpass connecting to Orchard MRT Interchange Station (for the North-South and Thomson-East Coast Lines) and neighbouring malls — Tang Plaza, Ion Orchard, Wheelock Place and Shaw House.

Incidentally, Wharf Estates also owns Wheelock Place, a mixed-use commercial building with a mall and a 21-storey office block. It was completed in 1993 and is one of the six buildings along Orchard Road that URA wants to see redeveloped into “a new exciting destination”.

Scotts Square has a generous walkway and a 50m frontage (Photo: Savills Singapore)

The third level of Scotts Square has a rear entrance to Nutmeg Road, a short walk to Mount Elizabeth Hospital and Medical Centre. To ride on the synergy, the new owner of Scotts Square could potentially lease the third floor to medical clinics, notes Lake.

As Orchard Road's rejuvenation picks up, even the 44-year-old Mount Elizabeth embarked on a $350 million refurbishment last year.

The 44-year-old Mount Elizabeth embarked on a $350 million refurbishment last year (Parkway Life REIT)

‘Increased interest from regional UHNWIs’

Future mixed-use schemes along Orchard Road include the redevelopment of ageing commercial buildings sold en bloc in the last two years. For example, last September, Far East Shopping Centre was sold to Chinese steel tycoon Du Shuanghua’s Glory Property Development for $908 million ($3,350 psf per plot ratio or ppr). Du also owns Pullman Singapore Orchard (former Grand Park Orchard), which opened in March 2023.

Royal Group of Companies, controlled by local property mogul Asok Kumar Hiranandani and his son, Bobby, purchased Ming Arcade in an en bloc deal worth $172 million ($3,125 psf ppr) in December 2022. It will be redeveloped into a luxury hotel along Cuscaden Road, just off Orchard Road.

Hotel Properties Ltd has also received URA approval to redevelop Voco Orchard Singapore Hotel, Forum The Shopping Mall and HPL House into a 1.23 million sq ft, mixed-use project with two towers comprising hotel, residences, office and retail space, the company announced on Aug 28 last year (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Nearby, the former Tanglin Shopping Centre has been torn down to make way for a new mixed-use development. It was purchased in February 2022 by Indonesian tycoon Sukanto Tanoto’s Singapore real estate company Pacific Eagle Real Estate for $868 million ($2,769 psf ppr). It was Tanglin Shopping Centre’s fourth collective sale attempt.

The former Tanglin Shopping Centre has been torn down to make way for a new mixed-use development [Photo: Samuel Isaac Chua/EdgeProp Singapore]

“Post-Covid, we have seen increased interest from regional ultra-high-net-worth buyers who like to invest in Singapore because it is a safe haven, and it’s part of their wealth preservation strategy,” says Savills’ Lake. “Recent hikes in the additional buyer’s stamp duty payable by foreigners for residential properties have resulted in foreign investors diverting their funds into the commercial property market.”

As asset enhancements and redevelopment activities along Orchard Road intensify, these property buyers expect higher footfalls, increased retail spending and further upside for rental growth and capital appreciation in the medium to long term, says Savills’ Lake.

Formerly known as Orchard Hills, the building at Bideford Road has been repositioned as a lifestyle destination, Como Orchard (Photo: Colliers/Knight Frank)

In June 2022, a subsidiary of Boustead Projects paid $515 million for an 18-storey, freehold luxury mixed-use development on the former Thong Sia Building site at 28 and 30 Bideford Road, off Orchard Road.

Formerly known as Orchard Hills, the building at Bideford Road has been repositioned as a lifestyle destination, Como Orchard. It houses the flagship 156-room Como Metropolitan Singapore hotel, Club 21 luxury fashion boutique, which spans two floors, and French pastry chef Cedric Grolet’s first Singapore store.

Scotts Square as two freehold, luxury apartment towers with 338 lunits sitting on top of the retail podium (Photo: Savills Singapore)

Luxury, freehold offering

Savills’ Lake, therefore, sees Scotts Square potentially repositioned as a lifestyle or retail destination. The 338 luxury residences above the mall are a mix of one- to three-bedroom apartments ranging from 603 to 1,249 sq ft. Launched in July 2007, all the units have been sold. The latest transaction was for a 947 sq ft, two-bedroom apartment that changed hands for $3.1 million ($3,273 psf), based on a caveat on Dec 19, 2023.

Scotts Square is a redevelopment of the former freehold Scotts Shopping Centre and the 23-storey, The Ascott Singapore Serviced Residences above it. Wharf Estates acquired the building for $345 million in June 2004 before redeveloping it.

Scotts Square has a dedicated carpark with 88 car parking spaces and five motorcyle bays in basement 2 (Photo: Savills Singapore)

The retail space has a strata area of 114,786 sq ft, which is 28.17% of the total strata area within the development. The new owner will also hold 43.34% of the share value.

Another attraction of the mall is that the owner will have control of the management strata title corporation (MCST) board. The development was structured with a two-tier MCST: one MCST for retail and a separate MCST for the residences.

Bang & Olufsen opened its gallery at Scotts Squre in 2022 (Photo: Savills Singapore)

“It gives the new owner of the mall autonomy when it comes to reconfiguring the space,” says Lake. “This is because the strata area includes the common areas in the mall and the carpark.”

The $450 million guide price for Scotts Square “is very palatable to a wide range of buyers”, adds Lake. At $3,438 psf ppr based on GFA, it is only a shade higher than the $3,350 psf ppr which the 999-year leasehold Far East Shopping Centre was sold at last September. He expects the property to attract multiple bids. The EOI exercise will close on Feb 6.

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