Alibaba Group has agreed to acquire a 50% stake in AXA Tower in a deal that values the 50-storey development at $1.68 billion. Image: Google Screen Grab

This comes after the Singapore arm of the Chinese e-commerce giant entered into a share purchase agreement with a consortium led by Perennial Real Estate Holdings to buy the stake, reported CNA.

Located at 8 Shenton Way within the Central Business District, AXA Tower has an existing gross floor area of 1.05 million sq ft.

The Grade-A office development, which comes with a retail podium, has obtained approval from the Urban Redevelopment Authority to increase its floor area to 1.55 million sq ft in order to integrate residential and hotel usage under the CBD Incentive Scheme.

The deal is slated for completion in June. Thereafter, Alibaba Singapore and the newly formed unit of the consortium, Perennial Newco, will form a joint venture to redevelop the property.

“Alibaba is already an anchor tenant at AXA Tower, and we are pleased to have their support in creating an iconic landmark in Singapore’s CBD,” said Perennial Chief Executive Officer Pua Seck Guan.

The Covid-19 pandemic has cast a dark shadow on the city-state’s economy, with businesses announcing wage cuts or urging employees to take no-pay leave on the back of falling revenue. Last month, the Singapore central bank warned that the country will enter a recession.

Alibaba’s acquisition not only provided a boost of confidence to the Singapore market, it also reaffirmed investor appetite for CBD assets, noted JLL, the real estate management company engaged by Alibaba Singapore for the deal.

“Amid ongoing market uncertainty related to the COVID-19 pandemic, technology and e-commerce companies have become essential providers of goods and services across the region,” said Regina Lim, Head of Asia Pacific Capital Markets Research at JLL.

“As a result of increased demand for their services and strong capital positions, they have remained active in their expansion and investment plans, with global gateway cities like Singapore proving an attractive destination for deployment.”

Source: CommercialGuru, 8 May 2020