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.