Afro Asia Building owner said to be partnering Shimizu for redevelopment | Singapore Property
An MOU is said to have been signed; Shimizu is to handle construction and pay bulk of a lease-upgrading premium
By Kalpana Rashiwalakalpana@sph.com.sg@KalpanaBT
The potential joint venture is said to value the existing Afro Asia Building in the region of S$170 million.
Aug 26, 20165:50 AM
AFRO Asia Building - one of the oldest office blocks along Robinson Road - may finally be redeveloped.
The seven-storey building, said to have been completed in the 1960s and which now houses MPH Bookstores and Uncle Sam's Claypots among its ground-floor tenants, is owned by Afro-Asia Shipping Company (AAS).
Following the resolution of a dispute last year within the Tan family that owns AAS, the company recently roped in Shimizu Corporation as a joint-venture partner for the development, The Business Times understands.
Word on the street is that the two parties have inked a memorandum of understanding (MOU); but even as they finalise the terms of the proposed joint venture, they are losing no time in re-starting redevelopment plans for the building - plans which had been stalled for several years because of the family feud.
Shimizu and AAS are expected to propose an office scheme, possibly with some ground-floor retail amenities. The proposed joint venture is said to value the existing property in the region of S$170 million; a development charge is said to have been paid some time ago to the state in exchange for the rights to take its gross floor area (GFA) up to the Master Plan plot ratio of 11.2. This would effectively pave the way for a maximum GFA of almost 180,000 sq ft, double the building's existing GFA.
Under Master Plan 2014 of the Urban Redevelopment Authority (URA), the site is zoned for commercial use and can be built up to 35 storeys.
Shimizu is expected to take a minority stake, probably around 40 per cent, in the joint-venture with AAS. The Japanese contractor will handle the construction and pay the bulk of a lease-upgrading premium to the state.
The site of Afro Asia Building, at 63 Robinson Road, has 34 years left on its lease.
Shimizu and AAS are in the process of submitting a planning application to URA. The duo will then use the planning approval to apply to the Singapore Land Authority (SLA) to top up the site's lease, analysts predict.
Attempts to reach AAS were not successful.
In 2008, AAS had obtained URA's written permission to redevelop the site into a 27-storey commercial building. However, despite several extensions of that approval, AAS did not begin redevelopment work; the approval lapsed in August 2014.
The company is also understood to have previously sought SLA's approval for a lease extension for the over 16,000 sq ft site. SLA agreed in principle and made an offer of a lease extension to AAS, but that offer also lapsed when the company did not proceed further.
Industry observers reckon that AAS did not go ahead with plans to redevelop the property back then because of the dispute between two camps in the Tan family over the will of the company's late founder, Tan Kiam Toen; the legal dispute among his children was settled last year.
An orphan, Mr Tan left China in 1935 and worked his way up in this region, trading in commodities and venturing successfully. In 1961, he set up AAS, which, four years later, bought what was then the headquarters for Chinese newspaper Nanyang Siang Pau, and renamed it Afro Asia Building.
Cushman & Wakefield is understood to have introduced Shimizu as a potential partner for AAS.
Shimizu was the main contractor for the construction of several CBD buildings; these include the Tokio Marine Centre, Republic Plaza and Mapletree Anson.
Property industry players say a redevelopment of Afro Asia Building would enliven what was once a landmark site in the old CBD. Knight Frank Singapore executive chairman Tan Tiong Cheng said: "The building seems to have been left behind while the surrounding properties have undergone rejuvenation. Even the CPF Building further down the road is slated to be pulled down early next year for redevelopment."
He added that a redevelopment of Afro Asia Building would be well timed with the 2021 opening of the Shenton Way MRT station about 120 metres away.
The building is on a site with a 99-year lease that started on Jan 1, 1952; its lease expires at the end of 2050.
Market watchers believe that going by the recent history of lease top-ups in the vicinity, SLA may agree to extend Afro Asia Building's land lease so that it will end in February 2093 - to match the remaining lease terms for 71 Robinson Road and the next-door 77 Robinson Road along the same street. (Afro Asia Building is separated from 71 Robinson Road by McCallum Street.)
Colliers Singapore's managing director Tang Wei Leng said: "The idea would be to have all sites on that stretch revert to the state simultaneously to facilitate future town planning and a more comprehensive redevelopment of the area."