Alibaba buys half of S$1.68 billion Tanjong Pagar skyscraper

There are plans to redevelop AXA Tower.

Tanya Ong | May 27, 2020, 01:45 PM

Chinese company Alibaba Group is buying a 50 per cent stake in AXA Tower in Singapore.

AXA Tower is home to Lazada, Alibaba’s Southeast Asia e-commerce platform, which takes up over 15 per cent of the space, South China Morning Post reported.

Details on the deal

According to a press release on May 6, a share purchase agreement was made between a consortium of investors led by Perennial Real Estate Holdings.

The deal, which values the property at S$1.68 billion, is expected to be completed by end-June 2020.

50 per cent of the outstanding loan has also been transferred to Alibaba Singapore, a subsidiary of Chinese e-commerce giant, Alibaba Group Holdings.

In 2015, the Perennial-led consortium purchased AXA Tower for S$1.17 billion.

What will happen next?

Upon completion of the transaction, expected to take place around June 2020, Perennial Newco and Alibaba Singapore will enter into a joint venture agreement for the redevelopment of AXA Tower.

Approval has been secured to increase the development's existing Gross Floor Area (GFA) from approximately 1.05 million sq ft to approximately 1.24 million sq ft.

Under the CBD Incentive Scheme, approval has also been obtained to further increase the GFA should it integrate hotel and residential usage.

Significance of deal

Earlier in April, the Monetary Authority of Singapore warned that Singapore is going into recession this year.

CNA reported that this deal serves as a "boost of confidence" to the Singapore market amid the Covid-19 economic downturn.

It has provided a boost to the Singapore market and reaffirmed investor appetite for CBD assets, a real estate management firm told CNA.

The acquisition also comes during a time where an increasing number of companies are transitioning to telecommuting work arrangements.

An Alibaba spokesman said that this investment will help fulfil their projected business needs as they continue continue to strengthen operations in Singapore, Bloomberg reported.

“Singapore is an important market for Alibaba,” the spokesman said.

About AXA Tower

AXA Tower is a 50-storey building located at 8 Shenton Way.

Completed in 1986, it was the tallest skyscraper in Singapore at that time.

It was formerly the Treasury Building until the Ministry of Finance and the Ministry of Trade and Industry relocated to High Street in 1997. The building was renamed Temasek Tower.

In 2011, the building was renamed yet again to the current AXA Tower.

Anchor and major tenants in the building include AXA Insurance, BOC Aviation, Red Hat Asia Pacific and Lazada South East Asia.

Top photo via Wikipedia.