Did you guys catch the full page advert on the Chicago Spire last Saturday? I remember seeing the exact same advert (with different contact details of course) in an in-flight magazine enroute from Zurich back to London; and thought what a peculiar building it was…it looks pretty much like a screw! So it caught me by surprise when I saw the full-page ad being splashed in our local The Star. I started to wonder if Malaysians do have the power to buy into this kinda development, which starts at about USD750,000 (RM2.391million) for the smallest studio unit all the way to USD40million for the penthouse with totals up to 1200 condo units. They have also added a guaranteed 7.5% returns for the first two years.

Anyway, seeing this being launched in KL, this could signal two things: either they have done enough research to know that there are a lot of Malaysians here who are loaded with cash who would invest, or they just had no choice to launch it overseas since the credit crunch crisis over at the Stateside. The Chicago Spire is marketed locally by Rahim-Co Savills.

31 Mar 2008: Offshore: Chicago Spire takes on the world (The Edge)

Singapore investors were among the first few hundred given the chance to cherry pick apartments in the soon-to-be-tallest skyscraper in the Northern Hemisphere, the 2,000ft-high Chicago Spire in the US. Recently, more than 800 people turned up for the private launch on a Friday evening, followed by a weekend property exhibition of The Chicago Spire.

“We have seen very strong sales coming from Singaporeans and Singapore-based expatriates. They are attracted by the truly iconic and spectacular scheme that will become the most significant residential development in the world,” says Michael Ng, managing director of Savills Singapore, which is marketing the project.

Singapore was the first stop in the Asian leg of the global launch of The Chicago Spire. Other cities on the tour include Hong Kong, Kuala Lumpur, Shanghai and Beijing. The Asian tour will be followed by a 15-city roadshow in Europe, the Middle East and South Africa. Savills was appointed the lead agent for the global marketing and sales campaign, which kicked off the official launch in Chicago’s Millennium Park on Jan 14 and the world tour in Dublin, Ireland the following weekend.

The Chicago Spire is more than double the height of Singapore’s tallest buildings, which are limited to 280m (918.4ft), including Republic Plaza, UOB Plaza and OUB Centre. The tower’s architect is the world-famous Spanish architect-artist-engineer-sculptor, Santiago Calatrava, who likens the tower to a “vertical city”.

Calatrava’s talent lies in transforming real estate into works of art. His first high-rise tower, called “Turning Torso”, is a 54-storey twisting building in Maimö, Sweden, completed in 2005. Other high-profile projects include the Athens Olympic Sports Complex, Tenerife Opera House and the World Trade Center Transportation Hub in New York.

In a city of high-rises, The Chicago Spire will easily surpass the 110-storey Sears Tower and 100-storey John Hancock Center in downtown Chicago. Elsewhere around the globe, it will also tower over other skyscrapers such as CN Tower in Toronto, Canada; Taipei 101 in Taiwan; and Freedom Tower in New York.

It is currently neck and neck with Emaar Properties’ Burj Dubai in competing for the title of world’s tallest building. Burj Dubai, a mixed-development with hotel, residences and commercial space, is under construction and stands 604.9m tall at the 159th storey. The final height of the structure is still under wraps.

Located at 400 North Lakeshore Drive, “The Chicago Spire is arguably on the best residential site in Chicago”, says its developer, Irish-born property tycoon Garrett Kelleher, who is also executive chairman of the Dublin-headquartered Shelbourne Development Group Inc, at a recent press conference in Singapore. “It is situated at the intersection of the Chicago River and Lake Michigan, bounded by water on all sides, with the canal to the north and river to the south.”

Humble beginnings
A classic example of one who is living the American Dream, the 46-year-old Kelleher moved to Chicago from Ireland in 1984 after studying mathematics at the Trinity College in Dublin. The father of seven started as a paint contractor, eventually develop­ing a major painting business in the Midwest.

Kelleher had his first taste of property development in Chicago when he remodelled a building at 1655 W Cortland Street in the Bucktown neighbourhood. He soon built a name for himself as a real estate developer in both Chicago and Dublin, where he has a development pipeline worth more than US$2 billion (about RM6.4 billion). He has since become a major developer and property investor with real estate interests in the US, Ireland, the UK, France and Belgium.

With construction costs estimated at US$2 billion, the Chicago Spire would be Kelleher’s single-largest and most high-profile project. Originally called the Fordham Spire and spearheaded by Chicago residential developer Christopher T Carley of the Fordham Co in July 2005, the building was planned as a mix of hotel and condominiums.

At end-March 2006, the Chicago City Council approved the design and raised the height limit at the site to accommodate a 2,000ft tower. However, after several months, the developer reportedly failed to get the necessary financing, and that was when Kelleher stepped in.

“In the summer of 2006, the opportunity arose for me to buy this site,” he says. “I had a very short window, just a few days to make the decision to close the deal on the site.”
While many developers in the US are having difficulty securing funding from nervous banks, Kelleher says he has already secured financing for the project. “For the work onsite, I’m putting in all cash from my own money,” he says, emphasising that he has no partners in the project. “I own 100% of the development, there are no equity investors at all.”

Attractive price, cheap US dollar
Why the big interest in a foreign property thousands of miles away in the cold, windy city of Chicago? “There are various economic reasons why it’s a very good time to buy real estate in the US now,” says Kelleher. “There is the currency play and, above all, an opportunity to own a piece of art.”

A premium address and a world-famous architect were definitely key factors, but more important were timing and pricing. A weak US dollar was also a draw. “A lot of Singapore and Asia-based investors are looking at a potential gain of 20% to 30% from betting on currency alone,” says Savills’ Ng.

As Singapore’s high-end properties adjust to the peak prices of last year’s boom, other cities are looking relatively cheap. The price of The Spire, at an average of US$1,300 to US$1,400 psf, translates to under S$2,000 (about RM4,608) psf — a “no-brainer” for Singapore investors, who are looking at asking prices from S$3,000 psf at most luxury projects in the Orchard Road districts of 9 and 10.

As it is, transactions of quite a few super-luxury residences crossed the S$4,000 psf mark last year, with some hitting S$5,000 psf — like the The Orchard Residences, sitting above ION Orchard shopping mall and the Orchard MRT station; and The Marq on Paterson Hill. Two of the four penthouses at The Orchard Residences set a record in Singapore in terms of transaction price psf — with the first at S$5,500 psf last September and another at S$5,600 psf in October.

Meanwhile, US choice properties are hitting a 10-year slump, buffeted by a glut and the credit squeeze. For the faint-hearted, the bearish global stock markets and a troubled US housing market may seem like a treacherous backdrop against which to stage a global launch of a super-luxury residential skyscraper, much less in the US. But to Kelleher, the timing was impeccable, and the bold bet on Asian interest in the project proved to be fortuitous.

Singapore was already earmarked as the first city in the Asian leg of the world tour. “We anticipated the risks, but we also knew that overseas property launches do thrive when the local markets start to ease off,” says David Ian Neubronner, executive director of Savills Residential. “This is exactly the case here. Singapore investors, having profited from the local markets [last year] and with cash in hand, are more receptive to other investment opportunities, including good overseas property investments. The Chicago Spire provided just that opportunity.”

Ironically, the US subprime mortgage crisis and volatile stock markets have dampened sentiment in the Singapore property market, with developers holding back their property launches and home buyers adopting a wait-and-see attitude.

Half of buyers expected to be global investors
Not surprisingly, Kelleher predicts “at least half the units will be sold overseas, outside America”. The Chicago Spire will have 1,193 residences, ranging from studio to four-bedroom apartments, gallery units, suites as well as a 10,293 sq ft duplex penthouse on the 141st and 142nd storeys. “No two residences will be alike,” he promises.

Savills says many of the interested parties were affluent Singaporeans, with a couple of American, British and Indonesian residents. The general preference among the Singapore crowd was for smaller one and two-bedroom units, with a couple of bookings for three- and four-bedroom apartments. Prices range from US$750,000 for a studio apartment to US$40 million for the penthouse. As a sweetener, a 7.5% guaranteed return was offered for the first two years.

The payment schedule is similar to the deferred payment scheme in Singapore, which was scrapped last October. In the case of The Chicago Spire, investors need only pay a 15% deposit upfront, with the balance due upon completion of the project in 4Q2011, says Neubronner.

Kelleher says Chicago is a relative­ly stable market. “Chicago is a city that has never had the peaks and troughs of the East and West Coasts of the US,” adds Kelleher. “It has never had the Silicon Valley or the Wall Street effect. It’s a diverse economy, with single-digit growth from 3% to 4% up to 7% to 8% [a year].

“So, it’s pretty stable and there’s very good value there compared with other cities like London, New York or even Dublin, for that matter. One other thing that is nice is that Chicago is a favourite for the Olympics 2016.”

While downtown Chicago is facing the worst combination of a record number of condos scheduled to be completed this year and a record number of unsold units (as at December 2007), “the re-sale market, usually the leading indicator of market recovery, has picked up tremendously since January”, says Michael Golden, co-founder of @properties, a Chicago-based real estate brokerage firm, who was also in Singapore a fortnight ago.
“A building like The Chicago Spire really is setting a new standard in Chicago. What we see is incredible demand from the local market and incredible local acceptance so far. Over the long term, a project that breaks the barriers [will] consistently outperform the market, and we expect the same from this [development].”

High-end residential schemes in Chicago are trading at US$1,200 to US$1,300 psf, with some hitting US$2,000 psf. Thus, upon visiting The Chicago Spire’s sales centres, people realise why the project offers “better value”. Investors are aware of the growth and risks of the local property market, argues Neubronner, who believes that The Chicago Spire offers “a low-risk opportunity, with steady returns over the medium term”.

Kelleher, with a reputation as a resourceful entreprenuer, has a history for being a contrarian. He made the City of London sit up and take notice when he purchased the Lloyds of London building on One Lime Street from a German fund for €355 million (about RM2.28 billion) in 2004. This time around, he is creating waves in cities around the world with the launch of The Chicago Spire.

“It’s unique and it’s a beautiful building,” he says. “The reception globally has been enormous, and it’s not through promotion but through attraction. People are attracted to it.”

Cecilia Chow is City and Country editor and Nova Theresianto is staff writer at The Edge Singapore

This entry was posted on Tuesday, April 8th, 2008 at 4:51 am and is filed under New Launches, Property News, Urbanseven says.... You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.