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The tender for the 1.1ha white site at Central Boulevard closed yesterday (08 November), attracting seven bids with the top bid at a record S$2.57 billion.
The bid price, which translates into S$1,689 per sq ft, was from Malaysia’s IOI Group subsidiary Wealthy Link, data from the Urban Redevelopment Authority (URA) revealed. The bid price was also about S$1.033 billion higher than the minimum bid price of not less than S$1.536 billion set at the launch of the site’s tender.
“This is the highest bid recorded for a white site in the Government Land Sales (GLS) Programme, beating the last record set by the sale of the white site on which Asia Square Tower 1 sits, at $1,409 psf set almost 10 years ago,” said Moray Armstrong, managing director for Advisory & Transaction at CBRE Singapore.
The 99-year leasehold, which was made available from the Reserve List of the second half 2015 Government Land Sales (GLS) Programme, has a 13.0 gross plot ratio and a maximum gross floor area (GFA) of 141,294 sq m.
According to JLL Singapore’s head of Research, Tan Huey Ying, the number of bids received for the site and the prices submitted is a reflection of the confidence in Singapore’s office market in the medium term.
“The aggressive bid of $1,689 per sq ft per plot ratio submitted by the highest tenderer is likely to have stemmed from their expectation of keen competition for the site, having regard to the scarcity of vacant plots available for the development of good grade modern offices in Singapore’s city centre.”
At least 100,000 sq m of the site’s maximum GFA will be set aside for office use, while a maximum of 5,000 sq m can be used for retail purposes. The remaining GFA can be used for additional office, school, hotel, serviced apartments or residential uses, however, analysts expects the winning developer to build a full-office project or a mixed-use office building with retail, noting that a hotel development is unlikely given the high price tag.
“Based on the highest bid price submitted, the developer is likely to be looking at a full office development and the breakeven for the development would be in the range of $3,000 to $3,100 per sq ft,” JLL’s Tan said.
Meanwhile, Cushman & Wakefield director of Research Christine Li said: ”
The inclusion of a residential component is feasible due to cautious optimism in the luxury residential market as prices in the CCR have started improving since 1Q2016. The pre-sales of residential units would also generate cash flow for the developer which could be used to partially fund construction costs.”
“With the retail component capped at a maximum 5,000 sqm, we expect developers to fully maximise the permitted retail area and include a high proportion of F&B space given the current paucity of dining options in the submarket,”
Li added apart from the site’s price tag, Hotel use is not likely given the established competition in the area and because the current hotel supply pipeline is adequate in light of the weak corporate traveller’s market.
The announcement of tender award will be made after all the bids have been evaluated.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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