IOI Properties and CapitaLand Investment closer to acquiring One Raffles Place in joint bid

[SINGAPORE] IOI Properties Group and CapitaLand Investment (CLI) are now in exclusive due diligence for the acquisition of One Raffles Place, with a 50-50 joint bid submitted to owners OUE Reit and UOB.

Speaking to The Business Times in Singapore on the sidelines of the Forbes Global CEO Conference on Wednesday (Oct 7), Malaysia’s IOI Properties Group CEO Lee Yeow Seng said the offer was made about three months ago.

Previous reports had put the indicative pricing for the prime Central Business District (CBD) property in the S$2.3 billion to S$2.4 billion range.

“Right now we have entered into exclusivity, and we are starting to do due diligence, and we are in the midst of discussing the final terms on the sales and purchase agreement,” Lee told BT in an interview.

He added that the joint-venture (JV) structure incorporates operational flexibility should exit options be considered down the road. “There is a tag-along clause like all other JVs,” he said.

The planned acquisition is part of a major strategic push by the Malaysian property giant to expand its Singapore commercial footprint beyond its current presence in Marina Bay and the Downtown Core.

Lee noted that One Raffles Place “is actually a landmark building in Singapore”, and pointed to Tower One’s status as one of the three tallest buildings in the country.

He also highlighted the property’s long leasehold tenure, “almost equivalent to a freehold property”.

One Raffles Place comprises two office towers – one of 62 storeys and the other, 38 storeys – and a six-level retail podium. The total net lettable area is understood to be about 875,000 square feet.

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The development is on four land parcels with a mix of tenures. One plot has an 841-year leasehold tenure, which started in November 1985; the other three have 99-year leasehold tenures (two starting from May 1983, and the third from November 1985).

One Raffles Place is primarily controlled by OUE Real Estate Investment Trust (Reit), which holds a 67.95 per cent effective interest via registered owner OUB Centre (OUBC).

UOB holds an 18.46 per cent beneficial interest in the property, held in trust by OUBC, in which UOB owns a 10 per cent stake.

While long-term rejuvenation is being evaluated, the group is assessing different plans, Lee noted.

“There is no fixed plan yet to redevelop the retail podium and Tower One... The first thing we will do after we acquire the assets is to improve on the tenancy mix in the retail podium.

“I think there’s a lot of demand for retail space in Raffles Place because there’s a big population of office crowds there, and a shortage of dining options. So we need to improve that and offer better options for the office workers downtown,” he said.

Growing portfolio

To support its rapidly expanding portfolio across Singapore – which includes IOI Central Boulevard Towers, South Beach and Shenton House – Lee is laying the groundwork for a capital-recycling exercise.

“Work began three to four months ago, and we (have) appointed DBS and Jefferies as main advisers,” he said.

The group has identified IOI Central Boulevard Towers and the office tower at South Beach as among the initial properties to seed the fund. Together, these two assets carry a valuation of around S$6 billion, noted Lee.

The group is planning to sell up to 40 per cent of its stake in both properties, and recycle capital of about S$2.4 billion. The stakes will probably be sold to the likes of private equity or sovereign wealth funds, Lee added.

Asked at the panel discussion about IOI’s debt, which in the last four years has increased by 40 per cent, the group CEO said: “Our game plan is not just to acquire blindly.”

“Our plan is to actually securitise our assets by offering a Reit; and other than a public Reit, we are also looking at a private fund,” Lee told the panel, noting that the group holds close to S$12 billion worth of prime Singapore office space.

Structuring such funds will allow IOI to deleverage, “and give ourselves more room to actually acquire more assets in the future”.

The timeline and execution for a Reit listing will depend on market conditions, he said.

IOI’s expansion comes as rising prime-office rents boost its existing portfolio yields.

At South Beach, office rental rates have climbed from S$9 per square foot (psf) to about S$11 psf over two years, while average daily rates at JW Marriott Hotel Singapore South Beach have doubled from about S$400 to S$800.

At IOI Central Boulevard Towers, rents have reached close to S$18 psf, from around S$8 psf when the site was acquired in 2016, Lee pointed out.

The group is also developing the 683-unit W Residences Singapore Marina View, on a site it acquired in 2021 for S$1.5 billion.

Sales for the luxury project have been slow, with 15 units sold at between S$1.9 million and S$10.9 million since marketing started in 2025.

With about 2 per cent of units sold, Lee said that the group has no intention of discounting remaining units.

“We will not drop prices in W Residences because we have created a very unique product – a high-end, branded service residence that offers hospitality-driven services similar to a luxury hotel.”

“We’re prepared to actually bite the bullet,” he said, holding on to unsold units to lease them out to expatriates and foreigners.

Asked how the CBD might evolve with the government’s push to bring more life into the business district, Lee said: “I think the Singapore CBD will become a very attractive place for Singaporeans as well as foreigners to want to live and work and play here.

“The main thing I think the government should do is, first of all, remove the additional buyer’s stamp duty (ABSD) for foreigners... It’s just too punitive,” he added.

Foreigners buying any residential property in Singapore are subjected to 60 per cent ABSD.

Focus on Singapore

The group is also preparing to redevelop Shenton House, which Lee acquired in 2023 for S$538 million under a private vehicle.

IOI Properties on Oct 2 agreed to acquire the private vehicle for S$1, also taking over the S$217.6 million in shareholder advances that Lee had injected as well as about S$376.23 million in debt.

The rebuild is scheduled to begin in early 2027, and is slated to take three to five years from demolition to completion.

Asked during the panel session about the IOI group’s recent acquisition “rampage” in Singapore, Lee put it down to deep personal familiarity and strong conviction in the city-state.

“I’m actually very familiar with Singapore... I studied here for six years as a student, and I’ve worked here for two years.

“I have confidence in the governance, in the stable policy and the strong government that Singapore has, and that is the underlying factor behind my confidence in Singapore.”

He has trained his focus on the prime CBD area.

“We are riding the wave – not just because of the tightness in supply of prime office space in the CBD area, but we are also riding the wave of the good policies introduced by the Singapore government.”

“My personal target is to be one of the three biggest developers in Singapore,” Lee added.