People’s Park Centre to relaunch $1.8b collective sale after failed attempt

People’s Park Centre will take another stab at a $1.8 billion collective sale despite a failed attempt that closed in August.

The public tender launches on Tuesday.

The previous tender had closed without any bids, and was followed by 10 weeks of private negotiations with marketing agency ERA Realty Network reaching out to property developers, fund managers and overseas investors.

Although nothing came of it, Mr Sunny Wong, ERA’s division director for the collective sale, told The Straits Times that developers showed genuine interest.

Mr Koh Yam Khoon, chairman of the collective sale committee, said they remain optimistic about a sale en bloc as the centre is located near the Central Business District and is next to an MRT interchange.

“It’s time for the Chinatown area to be rejuvenated, so we are confident to have the first mover advantage,” he said.

The reserve price for People’s Park Centre works out to a land rate of $2,620 per square foot per plot ratio (psf ppr). It also factors in the differential premium and the premium to top up the land tenure to a fresh 99-year lease.

But analysts remain skeptical as the large quantum poses a high risk for developers, especially with rising construction costs.

Huttons Asia’s senior director of research Lee Sze Teck said: “While buyers have shown a preference for integrated mixed-use developments, risks for People’s Park Centre are higher and the quantum exceeds $1 billion.”

Mr Lee said the land rate may set a new benchmark for residential units in the Chinatown area. “This may not be seen as realistically possible in today’s market,” he added.

The biggest collective sale here to date is the $1.34 billion Farrer Court deal sealed in 2007.

Asked about the decision to relaunch at the same reserve price, Mr Wong said the collective sales committee will not review the price without any concrete offers.

“Perhaps due to the scale of the project, more time may be needed to come to a decision or to consider a joint venture potential,” he said.

Attempts to sell the centre for $1.35 billion and $1.5 billion in 2019 failed as not enough owners consented to the move then.

To push through the collective sale of developments 10 years or older, consent of at least 80 per cent by share value and strata area from owners is needed.

People’s Park Centre comprises a 13-storey block and a 30-storey block, and has 324 shops, 256 offices, 120 apartments and a carpark.

Built in 1970, the 99-year leasehold development sits on a 95,467 sq ft site, with a gross floor area of about 821,017 sq ft.

The owner of clothing shop Karho Fashion, Mr Sam Yip, 74, said he hopes the centre will be successful in its next collective sale attempt as he wishes to retire.

“Even though business has improved since the Government lifted Covid-19 measures, it’s still at least 20 to 30 per cent lower compared with before the pandemic,” said Mr Yip, who bought his 52 sq m shop for $720,000 in 1996.

“My wife and I have been running the shop for more than 20 years, and we’re old and tired already.”

According to ERA, owners of shops ranging from 4 sq m to 596 sq m could receive sale proceeds of between $213,000 and $22.7 million, while those with offices of 21 sq m to 510 sq m could receive between $536,000 and $12.5 million.

Owners of apartments of 154 sq m to 224 sq m could receive between $2.39 million and $3.42 million, and with penthouses of 243 sq m to 392 sq m drawing between $3.42 million and $5.33 million.

Madam Tan Sor Ching, 57, the owner of shoe shop Kao Pink Shoes, said she will continue to wait for good news.

“The asking price is attractive, so I’m hoping to retire. Even though the market is bad, the location is good and business has returned to 2019 levels,” she said.

Resident Lee Chin Chee, 70, who has lived in his three-bedroom apartment in People’s Park Centre since 1976, said he is not disappointed about the unsuccessful attempt.

“I agreed to the collective sale because the other owners convinced me, but I wasn’t worried about it being successful or not. The building’s maintenance is good and I’m happy living and working here,” said Mr Lee, who also owns a luggage shop in the centre.

The tender for the site will close on Dec 12.