Central Boulevard site likely to attract keen interest

Property experts expect aggressive bidding from developers for plum mixed site

Developers are expected to show keen interest in a plum 1.1ha Marine Bay site in Central Boulevard launched for sale yesterday by the Urban Redevelopment Authority.

It was triggered for release from the Government's reserve list earlier this month, when a developer committed to bidding at least $1.536 billion at the tender.

The white site, which will mainly be an office development, comes nearly 10 years after the last office sites in the Marina Bay area - those of Asia Square - were sold in 2007.

The Central Boulevard Reserve Site was triggered for release from the Government's reserve list earlier this month, when a developer committed to bidding at least $1.536 billion at the tender.
The Central Boulevard Reserve Site was triggered for release from the Government's reserve list earlier this month, when a developer committed to bidding at least $1.536 billion at the tender. PHOTO: DON WONG FOR THE STRAITS TIMES

"From the interest we have seen, there could be more than 10 bids from a mix of local players - mid-sized to large developers - and probably in joint ventures with foreign developers. There could even be interest from sovereign wealth funds looking to acquire such prime development sites," said Ms Christine Li, Cushman & Wakefield director of research.

Grade A office assets in the Central Business District (CBD) are usually tightly held by real estate investment trusts and developers. Property that is readily available for buying and selling was just 7 per cent of overall Grade A stock in the area over the past 10 years, she added.

Much of this tradeable stock also ends up in third or related party transactions, such as CapitaGreen being sold by CapitaLand and their joint venture partners to CapitaLand Commercial Trust.

STIFF COMPETITION LIKELY

The expectation of stiff competition to stake a claim on the Marina Bay CBD, to develop a statement office building, could drive bids to aggressive levels.

MS TAY HUEY YING, JLL head of research for Singapore, who says bidders will probably look past current soft office demand and rental conditions, and focus on a potential market upturn when the project is completed in 2020 or 2021.

"So, in order for a fund to acquire something in the heart of Marina Bay, and if does not want to buy existing assets at exorbitant prices, it would have to take on development risks," Ms Li noted.

Developers may also have increasing confidence in the stability of the office market, given pre- commitment levels at some of the buildings completing this year.

Some new players might emerge at the tender, which closes on Nov 8. Investment money from China and the Middle East may be looking to buy in the Asia Pacific, especially after the Brexit vote in June.

China's Nanshan Group, which has developed only residential projects here so far, is said to have been the firm which triggered the release of the site.

Bidders will probably look past current soft office demand and rental conditions, and focus on a potential market upturn when the project is completed in 2020 or 2021, said Ms Tay Huey Ying, JLL head of research for Singapore.

"The expectation of stiff competition to stake a claim on the Marina Bay CBD, to develop a statement office building, could drive bids to aggressive levels," she added.

A version of this article appeared in the print edition of The Straits Times on August 31, 2016, with the headline 'Central Boulevard site likely to attract keen interest'. Print Edition | Subscribe