IOI Properties' IOI Central Boulevard in Singapore is worth RM21b at current prices - analyst
KUALA LUMPUR: The red hot office market in Singapore raises the value of IOI Properties Group Bhd's IOI Central Boulevard (IOICB) office building in Singapore to about RM21 billion (S$6.45 billion) at current valuations, Hong Leong Investment Bank Research said.
On Sep 24, 2024, a new record was set for office transactions in Singapore when two floors – levels nine and ten of Tong Building on Orchard Road – were sold for a record-breaking S$4,988 per square feet (psf). The 13,734 square feett space was sold for a total price of S$68.5 million.
Tong Building, a 19-storey freehold office building completed in 1978, is located at the prime corner of Orchard Road and Mount Elizabeth.
HLIB research said IOICB, while a leasehold property compared to Tong Building, is newer and more centrally located in the central business district and therefore justifying a similar valuation.
As of June 30, 2024, IOICB was valued at S$4.15 billion (or S$3,220 psf). If valued at S$5,000 psf, IOICB's value would rise to S$D6.45 billion (or a staggering RM21 billion.
"This would imply a potential revaluation gain of S$2.3 billion (RM7.48 billion), translating to an incremental RM1.36 per share, adding to its current net tangible asset of RM4.38. This highlights that investors are still undervaluing the building," HLIB Research said.
HLIB Research expects Singapore's hot property market to unleash significant value from IOICB and Marina View Residences, which should anchor strong earnings ahead for 2025 and beyond.
In a note today, the research firm said recent strong demand for a new luxury residential project launch in Singapore underscores local Singaporeans' strong purchasing power.
It added that this should boost confidence for IOI Properties' upcoming launch of ultra-luxury Marina View Residences before year end.
On Oct 5, during the first day of its launch, UOL Group sold 114 units (over 50 per cent) of its 226-unit luxury project, Meyer Blue in Singapore.
The average price was an elevated S$3,260 psf, with two penthouses sold at S$3,420 and S$3,440 psf.
Notably, 99 per cent of the buyers were Singaporeans and PRs, with one foreign buyer (a US citizen).
HLIB Research maintain's its forecatss and Buy rating for IOI Properties with an unchanged target price of RM3.90.
IOI Properties is currently trading unchanged at RM2.28 a share.