Orchard Road rejuvenation gets shot in the arm from Delfi Orchard sale

URA said it will consider granting exemptions if the proposed redevelopment has “a positive impact beyond the confines of a single site, and will contribute to the rejuvenation of the larger street block or precinct”. But Glory’s proposal did not meet any of these criteria, it added.

Meanwhile, the owners of the 999-year leasehold property in Orchard Road have reportedly received a new offer of under $900 million, after a second tender closed on May 2 without bids, but marketing agent CBRE declined to confirm the offer price and buyer’s identity, according to a Business Times report.

CBRE did not respond to queries about the new offer.

Green shoots amid risks

Some analysts flag higher development, construction and financing costs as a hurdle to large-scale redevelopment in the prime retail belt.

Redevelopment is a highly risky activity as developers are sacrificing current rental income for an uncertain outcome several years later, Mr Loo said.

“Historically, about a third of retail sales in Orchard Road came from tourists. As we are not yet back to pre-pandemic tourist numbers, it is unsurprising developers are being cautious,” he added.

But there are green shoots sprouting.

Since Singapore’s reopening in 2022, Orchard prime area retail rents have improved and could recover to pre-pandemic levels by the end of 2024, said Mr Wong Xian Yang, Cushman & Wakefield’s head of research for Singapore and South-east Asia.

With Singapore’s tourist arrivals potentially reaching 16.5 million in 2024, or about 86 per cent of pre-pandemic levels, this bodes well for Orchard’s retail rents, he added.

Mr Backen noted that Orchard Road’s position has been eroded “by the necessary growth in suburban malls”, which are designed to serve smaller areas. But he remains optimistic about its prospects, saying “none of the suburban retail precincts have the depth and scale offered” by the shopping belt.

A rapid roll-out of at least 10 hotel projects along Orchard Road since 2021 should attract more footfall and tourists, and in turn boost retail spending, analysts said.

These include Singapore Edition and Artyzen Singapore, two new-to-market brands that opened in November 2023, and the renovated Conrad Singapore Orchard – the former Regent Singapore – in December. All three are in Cuscaden Road.

Other redevelopment initiatives include the first major revamp since 2003 of The Cathay – home of the iconic Cathay Cineplex – which closed in August 2023, and is expected to reopen in late 2024.

Also under way is the redevelopment of UOL’s Faber House, an eight-storey commercial building located across the road from 313@somerset.

Construction work began in April 2023 after UOL received in-principle approval under the SDI scheme in 2021 to redevelop the building into a 19-storey 200-key hotel, which will include a bank, an urban veranda, food and beverage establishments, and a rooftop bar.

“The hotel will bring a ‘City in Nature’ appeal to Orchard Road with a cascading waterfall and cliff-like verdant vertical landscape that is carved out of the facade,” UOL said, adding that it will build a sheltered linkway from the hotel to Design Orchard at the third level, and a bridge to the old Singapore Chinese Girls’ School (SCGS) compound located behind the development.

Cistri’s Mr Loo said the SDI scheme is aimed at “pushing developers to make bold moves in driving urban transformation”.

“We understand that the conserved former SCGS at 37 Emerald Hill is currently being studied by URA and STB (Singapore Tourism Board) for future cultural and lifestyle uses,” he added.

Collective sale buzz is also growing on the other end of the shopping belt near Plaza Singapura, with the Concorde Hotel and Shopping Mall expected to be launched for sale in the second half of 2024.

The guide price has not been fixed, but is likely to be more than $800 million, said Mr Jeremy Lake, Savills Singapore’s managing director of investment sales and capital markets.

Scotts Square mall, just off Orchard Road, was put up for sale at $450 million in January, but has yet to find a buyer.

“If like Delfi, Scotts Square is also sold, this may boost the attractiveness of Far East Shopping Centre, as together with the redevelopment of Tanglin Shopping Centre, Forum, voco Orchard and HPL House, these projects could form another zone with higher-end offerings supported by its own residential and office catchment,” Colliers’ Ms He said.

Further, a healthy recovery in retail rents in the URA central region as of the first quarter 2024, coupled with the recovery in tourism, and an anticipated retreat in interest rates, should help push this transaction across the finish line eventually, she added.