DBS Group Holdings Ltd. agreed to buy a 30 percent stake in Singapore’s Marina Bay Financial Centre Tower 3, where the move of its headquarters was completed in October, for S$1.04 billion ($850 million) in cash.
DBS, Southeast Asia’s biggest lender, will buy the stake from a joint venture of Hutchison Whampoa Ltd. and Cheung Kong Holdings Ltd., it said in a statement today. The two companies are both controlled by Li Ka-shing, Asia’s richest man.
Expansion by banks, including Standard Chartered Plc and Barclays Plc, are driving office demand in Singapore as the city-state emerges as Asia’s center of wealth management. Singapore’s office rent may see “meaningful recovery” in the second half of 2014 after a decline this year, according to broker property Cushman & Wakefield Inc.
The transaction “could serve as a leading example showing investors are positive on the commercial property sector,” Ronald Wan, a Hong Kong-based managing director at China Merchants Securities Co., said by telephone today. “Investors will generally buy a commercial property when the price is very attractive or when they think it will be a good investment. For DBS, I think it’s the latter one.”
Winnie Cheong, a spokeswoman for Cheung Kong in Hong Kong, and Hans Leung, a spokesman for Hutchison Whampoa, didn’t immediately return calls from Bloomberg News seeking comments on the transaction. Li is 12th on the Bloomberg Billionaires Index with a net worth of $27.9 billion.
Singapore is building a new financial district on reclaimed land in the Marina Bay area, adjacent to the Marina Bay Sands hotel, casino, shopping and conference development. DBS is a so-called anchor tenant in the building that was completed this year, with 4,800 of its employees occupying 600,000 square feet on 18 of the tower’s 46 floors. Other tenants include legal firms WongPartnership LLP and Clifford Chance LLP.
“This transaction represents a unique opportunity for DBS to acquire a sizeable stake in its global headquarters and better manage its occupancy costs in the long term,” DBS said in the statement. “It also demonstrates DBS’ firm commitment to its home base as it further entrenches its leadership position in Singapore and the region.”
The Cheung Kong-Hutchison Whampoa venture currently owns one-third of the tower, which is part of the Marina Bay Financial Centre development, according to the statement. DBS has the right to buy the remaining 3.3 percent owned by the venture for S$115 million.
The remaining two-thirds of Marina Bay Financial Centre Tower 3 are equally owned by a subsidiary of Hongkong Land International Holdings Ltd. and a subsidiary of Keppel Land Properties Pte, according to the statement.