Cheung Kong and Hutchison Whampoa sold a combined 30 per cent interest in Singapore's Marina Bay Financial Centre Tower 3 for S$1.04 billion (HK$6.56 billion) to DBS Group.
One analyst suggested the companies sold because they thought the price of Singapore's office real estate had peaked. The stake was held through a joint venture.
Based on the agreement, which was announced yesterday, DBS Group has the option to buy the remaining 3.3 per cent interest in the building from Cheung Kong and Hutchison Whampoa for S$115 million when the whole development receives a temporary occupation permit. The two companies will not own any interest in the building once that transaction is completed.
Marina Bay Financial Centre was developed by Hongkong Land, Keppel Land and a joint venture between Cheung Kong and Hutchison. It comprises three office buildings, two residential towers and a shopping mall.
The project is located in Marina Bay, a newly developed business centre in Singapore.
The 46-storey Tower 3 office building provides a total gross floor area of 1.35 million sq ft. DBS Group, already an anchor tenant of Tower 3, paid HK$16,198 per sq ft for the space. The financial services group has leased 18 office floors with a total floor area of more than 600,000 sq ft since October. Other tenants include law firm Clifford Chance, nutrition company Mead Johnson and health club operator Fitness First. Each floor has between 29,000 and 45,000 sq ft of space.
Cheung Kong executive director Justin Chiu Kwok-hung said: "Cheung Kong has confidence on the future development of Singapore and will continue to develop real estate projects in Singapore. We will actively develop residential, shopping mall and office buildings."
Lee Wee Liat, head of property research at BNP Paribas Securities, said: "Cheung Kong used to sell its assets when it believed the value could not be enhanced. It may believe Singapore's office rents will be flat in future as there will be plenty of new office supply in the coming two years."
He also noted that "the government has many office development sites available for sale. It is different with Hong Kong, which has a shortage of supply."
Lee said Cheung Kong might acquire development sites in Hong Kong and the mainland next year as more sites were released for sale.
Research by property firm CBRE showed rents for Singapore grade A office space dropped 11 per cent in the first three quarters of this year. CBRE expects further declines to be minimal in the fourth quarter, and to bottom out next year.