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.