Could Wharf be compelled to sell Scotts Square due to the increased competition in Orchard Road?
Scotts Square could be a little too small and in the wrong location to be competitive.
According to Wharf REIC’s latest annual reports, Wheelock Place is a 99 year leasehold with 221,800 sq.ft.of office space and 244,900 sq.ft.of retail space. Wheelock Place offers a combined GFA for office and retail that is over 3.5x larger than Scotts Square.
Wheelock Place is strategically located at Orchard Road’s heart, where future developments by HPL or Pacific Eagle will complement those of other leading malls.
Scotts Square itself is in the Scotts Road section, but shoppers may choose to bypass this area.
Scotts Road may see a boost in traffic if Far East Plaza is redeveloped. Far East Plaza’s strata-freehold retail units may not be redeveloped, however, because they are owned by a variety of owners.
Wharf REIC is a long-standing partner of the Woos and has a strong connection to Singapore. Wheelock Properties, which built the iconic luxury condo Ardmore Park in the Orchard Road region, also shares ties.
Wharf REIC is right to consider a possible retreat from Orchard Road.
Smaller assets and older properties in the region may suffer as a result of stiffer competition. Orchard Road is likely to be divided into two halves – certain malls could shine while others struggle.
Scotts Square is facing a lot of competition from the surrounding area.
Wharf Estates Singapore has listed the freehold Scotts Square retail podium for sale. The guide price is S$450,000,000.
Scotts Square along Scotts Road is a part a mixed-use project that also includes residential apartments. Its price guide is S$3,438 (S$3,438 per sq. ft. per plot ratio) based a 130,875-square-foot gross floor area.
Wharf REIC is not under financial stress. In the results presentation of H1 FY2023 (ended June 30, 2023) the group claimed that it’s net debt was lowest in 4 years and its credit rating from Moody’s was A2.
Wharf REIC will have a net equity to debt ratio of approximately 20% by the end June 2023. For H1 of FY2023, the group had a profit and paid an intermediate dividend.
Good investment asset
Scotts Square was a rare freehold asset, since the government usually leases out new commercial sites for 99 years.
Wharf REIC has also expressed satisfaction with the mall’s performance. Wharf REIC claimed that Singapore had been growing since 2022.
Wheelock Place and Scotts Square were occupied at a high rate and enjoyed busy foot traffic in Orchard Road. Retail occupancy rates for the two properties were 99.9% and 98.9%, respectively, by end-June, 2023.
Wharf REIC’s real estate portfolio is Hong Kong centric and includes asset categories such as hotel, office, retail and office. Hong Kong’s property market has a rocky outlook. Therefore, the group should consider diversifying its portfolio by investing in Singapore assets.
Wharf REIC, on the other hand, could increase its presence instead of shrinking. Link Real Estate Investment Trust – a Hong Kong listed company – entered Singapore’s shopping mall ownership scene in 2023, when it acquired Jurong Point & Swing By @ Thomson Plaza.
According to Savills Singapore marketing agent, Scotts Square also has potential to increase the net lettable space and rents.
Wharf REIC would be in a position to improve and reposition Scotts Square. The group’s flagship Harbour City can be found in Tsim Sha Tsui. It is Hong Kong’s biggest shopping and entertainment hub.
Wheelock Place verse Scotts Square
Wharf REIC might have good reasons why it wants to keep Scotts Square, but give up Wheelock Place.
Orchard Road’s shopping street is experiencing new developments. As a result, it could see a rise in visitors from Singapore.
Hotel Properties Limited H15 0% could transform the Forum The Shopping Mall, voco Orchard Singapore, and HPL House at the western end Orchard Road into a major mixed-use redevelopment that includes a hotel, luxury residences, retail and office space.
Major changes have been afoot on Singapore’s Orchard Road. Scotts Square, one of the region’s most famous shopping malls, could change hands in the near future.
Far East Shopping Centre is also near the voco Orchard Singapore. A company affiliated with Bright Ruby Resources (a Chinese tycoon) and Du Shuanghua purchased it as part of a collective sales.
Pacific Eagle Real Estate could transform the Tanglin Shopping Centre near you, which was acquired in a joint sale by Tanoto.
Singtel partnered Lendlease with the real estate group Lendlease at its Comcentre headquarters located on the other side of Orchard Road.
It is difficult to understand why the mall’s owner, who has owned it for a long time, would sell the asset.
Wheelock Properties, in 2004, bought Scotts Shopping Centre as well as The Ascott Singapore Serviced Residences. Scotts Square is the result of a redevelopment project that transformed Picnic, Singapore’s original food court, into a Scotts Square.
Wharf Real Estate Investment Company REIC (listed in Hong Kong) is the ultimate shareholder of WES. Wharf REIC’s biggest shareholder is Wheelock and Company. Wheelock and Company is linked to Hong Kong billionaire Woo.
