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Thread: IOI places record bid of $2.57 billion for Marina Bay site

  1. #1
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    Default IOI places record bid of $2.57 billion for Marina Bay site

    http://www.straitstimes.com/business...arina-bay-site

    IOI places record bid of $2.57 billion for Marina Bay site

    Nov 9, 2016

    Lee Xin En


    Malaysia's IOI Properties Group has blown away rivals with a $2.57 billion bid in a hotly contested tender for a mixed-use Marina Bay site. It was almost $362 million, or 16.4 per cent, above the second-highest bid by Mapletree.

    The bid for the plum site is also the highest recorded for a so-called "white" or mixed-use site in the Government Land Sales programme. It broke the record of a neighbouring site, now home to Asia Square Tower 1, sold at $1,409 per sq ft almost 10 years ago, said Mr Moray Armstrong, property consultancy CBRE's managing director for advisory and transaction.

    All seven bids in the latest tender exceeded market expectations.

    The site had been triggered for release from the Government's reserve list in August, when a developer committed to bidding at least $1.536 billion at the tender. That worked out to be about $1,010 per sq ft per plot ratio (psf ppr).

    The top bid from IOI Properties, made through its investment holding company Wealthy Link, came to about $1,689 psf ppr while the lowest, a joint venture between OUE, Guangzhou R&F Properties and Tang City Properties, put in a bid of $1.91 billion, which works out to be about $1,256 psf ppr.

    Mr Desmond Sim, head of research at CBRE, said that IOI's bid "reflects the hunger to win".

    "This is a closed tender, so if you are more hungry to win the bid, you will put up a more bullish plan, within your working calculations."

    He said the bullishness of IOI, which he called a "learned investor", probably reflected its "previous success in the office market, based on its investment in South Beach".

    Despite the current soft office market, the tender reflects confidence in Singapore's office market in the medium term, said Ms Tay Huey Ying, head of research at real estate firm JLL. It reflects confidence that prime office rents in the Marina Bay area will recover to their 2015 peak by 2021, when the development is expected to be completed.

    The Central Boulevard site is also the first in which the Urban Redevelopment Authority (URA) has imposed a new cap on the number of carpark spaces that can be built. URA cited the site's good public transport links - it is near the Raffles Place, Downtown and upcoming Shenton Way MRT stations - as a reason for it needing fewer parking spaces.

    Ms Christine Li, director of research at property consultancy Cushman and Wakefield, ruled out hotel use, but said that it was feasible that part of the plot would be residential as this would generate cash flow for the developer to partially fund construction. But she noted risks such as uncertainty over the removal of additional buyer's stamp duty and stiff competition from the Marina One Residences.


  2. #2
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    Default IOI surprises market with record land bid

    http://www.businesstimes.com.sg/real...ecord-land-bid

    IOI surprises market with record land bid

    Its bid of S$2.57b (S$1,689 psf ppr) for the white site in Central Boulevard is the highest for a GLS site in S'pore

    By Kalpana Rashiwala

    [email protected]

    @KalpanaBT

    Nov 9, 2016


    MALAYSIAN plantation and real-estate tycoon Lee Shin Cheng has surprised the market with a bullish top bid of nearly S$2.57 billion or S$1,689 per square foot per plot ratio (psf ppr) for a white site in Central Boulevard.

    The bid from IOI Properties Group is the highest in absolute dollar quantum as well as by psf ppr for a Government Land Sale (GLS) site in Singapore. The tender drew seven bids. IOI's bid was 16.4 per cent higher than that of its closest competitor, Temasek-owned Mapletree Investments, which offered S$1,451 psf ppr.

    Nanshan Group, which The Business Times had earlier identified as the party that triggered the 99-year leasehold site's release from the government reserve list, bid S$1,438 psf ppr for the 1.1-ha site.

    The Urban Redevelopment Authority (URA) closed the tender on Tuesday.

    The top three bids were higher than the S$1,409 psf ppr fetched for the adjacent site, on which now stands Asia Square Tower 1, at a URA tender nine years ago. That bid amounted to S$2.02 billion.

    The Malaysian tycoon's younger son and IOI Properties chief executive Lee Yeow Seng told BT the group is looking at an all-office development on the Central Boulevard site.

    Noting that the total development cost would be "over S$3 billion", he indicated that IOI expects to begin construction around late 2017 or early 2018, with a construction period of four to five years. The group is open to developing just a single office tower or two towers, he added.

    For now, IOI is going in solo for the development, although it is not ruling out the possibility of taking joint-venture partners later.

    Acknowledging that the Singapore office market is currently not in its best shape, Mr Lee said : "There is a bit of a glut at the moment, but we're taking a longer-term view. The government has managed to transform the economy; Singapore is no longer just a regional financial centre. It has done very well in terms of attracting IT companies, for instance. Just look at South Beach Tower, where Facebook is (an anchor tenant) and is looking for even more space."

    IOI Properties partnered City Developments for the South Beach mixed-development project and Ho Bee for two condo projects in Sentosa Cove - Seascape and Cape Royale. IOI is developing The Trilinq condo in Clementi as well.

    The group also developed the former IOI Plaza, a 12-storey granite office block at the corner of Middle Road and Prinsep Street, a white site the group clinched in a URA tender in 1996. In 2010, the group sold the building to Singapore Pools.

    Colliers International managing director of Asia capital markets and investment services Terence Tang estimates IOI Properties' breakeven cost for a full-office project on the Central Boulevard site at S$2,600 psf, "given that the group is an experienced developer in Singapore and assuming it builds a single office tower which will maximise efficiency, or the ratio of net lettable area (NLA) to gross floor area (GFA)".

    Assuming an 85 per cent efficiency ratio, the site can yield 1.29 million sq ft NLA of offices.

    However, an insider suggested IOI could push down the breakeven cost to around S$2,500 psf, considering the senior Mr Lee's modus operandi - which includes minimising borrowing.

    At the other end of forecasts, JLL's Singapore research head Tay Huey Ying estimates the breakeven cost at S$3,000 to S$3,100 psf. "The aggressive bid is likely to have stemmed from the expectation of keen competition and the desire to clinch a new downtown site to build a trophy commercial building carrying the bidder's name."

    IOI's pricing for the site also reflects its confidence that prime office rents in the Marina Bay area will recover to the recent (Q1 2015) peak of S$12.90 psf a month or higher by the time this project is completed - from the Q3 2016 level of S$9.54 psf, said Ms Tay.

    Mr Tang of Colliers said: "Today's tender result is set to boost commercial property values in Singapore's CBD and stir further interest from foreign investors in the office market."

    BlackRock is seen to be one of the most immediate beneficiaries from any euphoria generated by Tuesday's tender close. The world's largest money manager is currently sussing out interest in Asia Square Tower 2, which has about 780,000 sq ft NLA. Earlier this year, it sold Tower 1 for S$3.4 billion or around S$2,700 psf on NLA to Qatar Investment Authority.

    Also bidding at Tuesday's tender for the Central Boulevard site was a tie-up between Hongkong Land and Cheung Kong Holdings, which offered S$1,398 psf ppr.

    CapitaLand Group of companies, in partnership with Hongkong-based Great Eagle Group founded by hotel and real estate tycoon Y S Lo, made a S$1,318 psf ppr bid. Yanlord offered S$1,305 psf ppr.

    The lowest bid of S$1.91 billion or S$1,256 psf ppr came from a consortium comprising OUE Limited, Guangzhou R&F Properties Co and Tang City Properties.

    Located next to Downtown MRT station, the Central Boulevard site may be built up to 50 storeys, with a maximum GFA of 141,294 sq m (1.52 million sq ft), of which at least 100,000 sq m or 70.77 per cent must be put to office use. In addition, up to 5,000 sq m GFA can be set aside for retail use. The development is to include a childcare facility of at least 500 sq m. The balance may be utilised for additional office, commercial school, hotel, serviced apartment or residential uses.

    The entire development, excluding the GFA for hotel, serviced apartment and residential use, can have no more than three strata lots. This means that strata subdivision of office units for sale as multiple individual units is not allowed.

    Nanshan successfully applied for the site's release with an undertaking to bid at least S$1.536 billion (S$1,010 psf ppr), but will not be walking away with this coveted land parcel.

    CBRE Research head of Singapore and South-east Asia Desmond Sim quipped: "This proves the triggerer's curse."

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