A subsidiary of Cathay Organisation, controlled by Choo Meileen, is believed to be the buyer. Knight Frank is said to have brokered the deal by private treaty. It declined to comment when contacted.

The $81.38 million transacted price for the 16-storey freehold office block is about 36 per cent lower than the $128 million the seller paid for the property two years ago.

Still, the loss for UK fund manager New Star Asset Management Group (which was acquired recently by Henderson Group) would be mitigated substantially by the Singapore dollar’s appreciation relative to the pound over the two years.

The last major office investment sales deal was in June last year when City Developments Ltd sold the 999-year leasehold Commerce Point near Raffles Place MRT Station for $2,200 psf.

There was at least one other smaller deal after that – the $21.5 million sale of Beach Junction at Beach Road in August last year.

The dearth of sales of office blocks since then, in the aftermath of the global financial crisis, has made it hard to price such assets, although rents have clearly fallen.

The average gross monthly Grade A office rental value has fallen about 35 per cent from a high of $18.80 psf in Q2 and Q3 last year to $12.30 psf in Q1 this year, according to CB Richard Ellis figures.

While Parakou Building has sold for 36 per cent below what the seller had paid two years ago, bigger price discounts are expected for larger office towers costing several hundred million dollars or more, because there is less equity around and because of tight bank financing, property agents say.

‘So potentially, based on a returns perspective, the price benchmark might be tested again,’ a senior property consultant said.

Source: Business Times, 18 May 2009