Beach Road commercial site triggered for tender

[reporter2]

Beach Road commercial site triggered for tender

Jun 22, 2017

Wong Siew Ying


A Beach Road commercial site will go on sale in about two weeks - and analysts expect stiff competition. The 2ha plot can be developed for office and retail use, and hotel, service apartments and residential options are also allowed.

The Urban Redevelopment Authority (URA) said yesterday that a developer has committed to bid at least $1.138 billion for the 99-year leasehold parcel, which is on its reserve list. Under the reserve list system, a site goes up for tender when a developer lodges an acceptable minimum bid.

That this site has been triggered for sale did not surprise market watchers. "(It) comes in tandem with positive investment sentiments in the office property market and also at a time when office rents appear to be firming after two years of decline," said Mr Ong Teck Hui, national director for research and consultancy at JLL.

The URA says the plot, which will have a maximum permissible gross floor area of 88,313 sq m, includes the former Beach Road Police Station. At least 70 per cent or 61,820 sq m of the GFA must be for office use, while a maximum of 3,000 sq m can be use for retail.

"With the residential market improving, the developer can consider including a residential component within the development," said Dr Lee Nai Jia, head of research at consultancy Edmund Tie & Company. He expects at least 10 bids for the site, with the winning tender likely to hit close to $1.2 billion to $1.3 billion, or about $1,300 to $1,400 per square foot per plot ratio (psf ppr). Consultancy Colliers International projects a top bid of $1.2 billion to $1.25 billion, or $1,262 to $1,315 psf ppr.

Both projections trump the minimum trigger bid of $1,197 psf ppr by the unnamed developer.

Keen competition for the site is expected from both local and foreign developers. Ms Tricia Song, head of research, Colliers International, Singapore, said: "One such foreign developer could be Nanshan Group, who was reported to have triggered the Central Boulevard site last year, but did not win." Malaysia's IOI Properties Group blew away six contenders to clinch the tender for a record $2.57 billion or $1,689 psf ppr.

Savills Singapore research head Alan Cheong said the "trophy asset" developed on the Beach Road site could hit the market around 2022 - when there is limited supply of prime office space.

[reporter2]

Commercial site at Beach Road triggered for public tender

June 22, 2017

Lynette Khoo



A COMMERCIAL site at Beach Road with at least a 70 per cent office component has been triggered for sale under the Reserve List of the government land sales (GLS) programme, reinforcing analysts' perception that a recovery in sentiment for the office market is underway.

The Urban Redevelopment Authority (URA) said on Wednesday that it has accepted an application from a developer to put up the site for public tender. The unidentified developer has committed to bid at a price of no less than S$1.138 billion.

This two-hectare land parcel, which has a 99-year leasehold tenure, will have a maximum permissible gross floor area (GFA) of 88,313 sq metres.

At least 61,820 sqm has to be for office use. The remaining GFA can be developed for additional office, retail (subject to a maximum GFA of 3,000 sqm), hotel, serviced apartment and/ or residential uses.

JLL national director for research and consultancy Ong Teck Hui noted that the triggering of this site comes in tandem with positive investment sentiment in the office property market and also "at a time when office rents appear to be firming after two years of decline".

It would not be surprising if the unsuccessful bidders for the Central Boulevard site last November contest again for the Beach Road site, he added. "If residential use is incorporated in the development, it would coincide with an expected upturn in the residential market."



Most consultants expect at least 10 bids from a mix of local and foreign developers, with the winning bid in the range of S$1,400-1,700 per square foot per plot ratio (psf ppr).

The Central Boulevard white site last year drew a bullish top bid of nearly S$2.57 billion or S$1,689 psf ppr from Malaysia's IOI Properties Group, which roped in Hongkong Land this month through a joint venture to jointly develop the site.

Savills Singapore research head Alan Cheong flagged that the public tender for the Beach Road site may cause an upward adjustment of expectations of what values should be for CBD Grade-A offices.

Lee Nai Jia, head of South-east Asia research at consultancy Edmund Tie and Company, felt that with office rents of newer buildings stabilising and sentiment in the residential market improving, it is a good time to enter the market.

"There is much capital due to the low interest rate environment and limited supply of developments available in the market," he said.

The keen interest in CBD office developments has also spilled over to the Beach Road area, he added. "We anticipate that new developments such as DUO and South Beach will rejuvenate the area, with more companies willing to relocate there."

The former Beach Road Police Station sits on the site and the developer is expected to conserve and restore the building. The developer is also required to build an underground pedestrian link to the nearby Bugis MRT station.

Apart from any GFA for hotel, serviced apartments or residential use, the rest of the development's GFA cannot have more than three strata lots, thus prohibiting strata sub-division of the commercial and retail components.

Some consultants felt that the conservation of the former Beach Road police station on the site will enhance the character of the development.

Knight Frank head of research and consultancy Alice Tan noted that while the conservation element may cap building efficiency of the project, this conservation building fronts the main Beach Road, allowing the developer to introduce some highly visible and attractive retail concepts.

Ms Tan envisaged the Beach Road/ Ophir-Rochor area to shape up as a business enclave with this commercial development, along with DUO, South Beach and Suntec City. "This location has its distinctive uniqueness, being near Bugis with its attractive array of recreational, retail and hospitality amenities," she said.

Dr Lee also said the office development at the Beach Road site will shore up critical mass of new office buildings in the vicinity. Gross rents of newer office buildings in the area - namely DUO Tower and South Beach Tower - ranged from S$9.80 to S$11 per sq ft, comparable to Grade-A offices in Raffles Place, he pointed out.

The Beach Road site was first made available for sale on the GLS Reserve List in November 2014. URA said the public tender will be launched in about two weeks with a tender period of 12 weeks.

[PropVestor]

I really hope that a China developer pay top dollar for this site (my guesstimate for the land price is about there with this reporter) and also build residential component with it.

This will have implications to DUO and neighbouring site prices in about 5 years from now. Can't wait.