Property investment company Blue Sun Holdings is refurbishing a freehold industrial building in Tai Seng into the first smart-managed green building in the industrial area. The 11-storey building at 7 Harvey Road was sold to the investment firm for $27 million in January 2021, shortly after the property received its Temporary Occupation Permit (TOP) in October 2020.
According to Kenny Chai, managing director at Blue Sun Holdings, the investment firm came across the property on the market last year. The previous owner was looking to sell the building to raise cash for his business to tide over the Covid-19 pandemic.
This is the first major industrial acquisition and refurbishment exercise by Blue Sun Holdings since the investment firm entered the property market in 2016. It is also the first time the company is investing capital to incorporate smart technologies and sustainable features into one of its buildings.
The company’s portfolio in Singapore includes conservation shophouses in Balestier, freehold medical suites in Centrium Square, residential units at V on Shenton, and Delta House Industrial Complex at Lower Delta Road.
“We’ve had a presence in the Singapore property market since 2016 and have been looking to acquire and repurpose standalone industrial properties here. It has been our desire to invest in larger commercial and industrial buildings in Singapore, and repurpose them with new green features,” says Chai.
The freehold building at 7 Harvey Road is currently undergoing refurbishments that are expected to be completed by August 2021. The property sits on a 12,915 sq ft site and has a built-up area of 32,069 sq ft. The site is zoned “Business 1” under the 2019 Master Plan.
According to the investment company, the building will have a bistro-style dining area on the first floor, with car park facilities from the second to fifth floors. The property will have 18 units for rent that are spread across the seventh to 10th floors. A sky garden will occupy the sixth floor, which will also accommodate a fitness area and a communal farm.
Blue Sun Holdings has contracted local design firm Pomeroy Studio to design sustainable features for the building. Pomeroy Studio was behind the design of business park Alice @ Mediapolis by Boustead Projects. Blue Sun Holdings says that Pomeroy Studio will “apply their green research into creating an alternative industrial workspace” at 7 Harvey Road.
One of the green features being installed at 7 Harvey Road is a rooftop solar farm that is expected to reduce the overall energy consumption of the building by about 10–15% compared to a typical building of this size and usage.
“In addition to the solar panels, there will be the added effect of smart air-conditioners and smart lighting systems integrated in the building. These will all be centrally controlled by a smart building management system,” says Chai.
The importance of contributing to, and being part of, the growing green movement in the built environment is a rising priority for some international businesses in Singapore and a growing number of local companies, says Chai.
“The government has been promoting sustainability in the built environment for the past few years, but it only really caught on as more building owners, developers, and asset managers tapped solar panels to offset their overall utility consumption. Now more companies want to be a part of the broader sustainability movement,” he says.
Encouraging the widespread adoption of green features and sustainable technologies in the built environment has been a top-down push by the government over the past few years. The most recent effort was the announcement of a nationwide movement to advance sustainable development and the unveiling of the Singapore Green Plan 2030.
AI-led building management
According to Chai, the firm has been on the lookout for suitable properties in the Ubi and Tai Seng areas to invest in for the past two years. But only a handful of available buildings were on the market and most were B1 factory ramp-up buildings that would be too costly to redevelop.
“We decided to focus on the Tai Seng and Ubi areas because we believe they are underserved in terms of the supply of new buildings with energy-efficient green features. Most of the available green buildings in Singapore tend to be in the CBD,” says Chai.
The company is banking on a decade-long trend that could see strong growth in the demand for new industrial buildings with sustainable features in city-fringe districts like Tai Seng. Prominent businesses which already have their headquarters in the area include homegrown F&B multinational corporation BreadTalk as well as Sakae Holdings which owns the sushi brand Sakae Sushi.
“These areas have huge potential to grow as new technology industries such as software developers move their offices into these city-fringe locations. This is because most properties here are more spacious and cost less to rent compared to CBD spaces,” says Chai.
He adds that demand for newer buildings has also received a boost from the growth of direct-to-consumer businesses and the booming e-commerce market in Singapore. “Traditionally prestigious CBD addresses are no longer the priority for such businesses; even the larger-sized ones like Shopee are headquartered in [the city-fringe area of] Buona Vista,” he says.
According to the investment firm, the average rent for a non-green building in the Tai Seng area is about $2.50 psf to $3.50 psf. The higher rate is typically for serviced offices in the area. The investment firm hopes to charge an average rent of about $3 psf to $4.20 psf at 7 Harvey Road, subject to future reviews.
The company says that about 30% of the office spaces at 7 Harvey Road have already been taken up, and the firm is in active discussions to lease the remaining workspaces.
Upcoming disposals and acquisitions
Looking ahead, the investment firm says that it will be focusing its efforts on acquiring and repurposing other industrial buildings and incorporating green features.
Land tenure is an important factor as it takes 5–10 years for the company to see a return on its investment in a green redevelopment project. Thus, this excludes buildings with a 30- or 60-year leasehold, and the company prefers 99-year or freehold properties.
The firm will also start to gradually divest its current portfolio of shophouses and medical suites as it redirects capital into acquiring industrial buildings. “Some of the potential areas we are looking at are older buildings in the CBD that are due for en bloc. We are also looking at the Kallang area for potential buildings to acquire,” says Chai.