A Beach Road commercial site that includes the area's old police station is finally hitting the market for sale.
Stiff competition is expected for the 2ha plot, which comes with the condition that the former station be conserved.
The reserve list site was put up for sale by public tender by the Urban Redevelopment Authority yesterday after a developer committed to bid at least $1.138 billion for the 99-year leasehold parcel.
A plot on the reserve list goes up for tender after a developer lodges an acceptable minimum bid.
The Beach Road plot will have a maximum permissible gross floor area of 950,592 sq ft. At least 70 per cent - or 665,424 sq ft - must be used for offices, with a maximum of 32,292 sq ft for retail space.
Ms Christine Li, director of research at Cushman & Wakefield, said: "Given the ongoing recovery of the office market, we expect the winning tenderer to maximise the office component and develop a commercial property with a 918,300 sq ft gross floor area of office space and a 32,292 sq ft gross floor area of retail space."
She noted that with the nearby South Beach commanding "achievable rents of $9 per sq ft (psf)" - close to the average Marina Bay rent of $9.48 psf - the winning bid is likely to be in the range of $1,400 to $1,700 psf per plot ratio (ppr).
This would translate into a total bid quantum of $1.3 billion to $1.6 billion, and possibly match the $1,689 psf ppr paid for the Central Boulevard site. But Ms Li noted that the irregular shape of the land parcel owing to the adjacent Shaw Towers is a drawback.
Dr Lee Nai Jia, head of research at consultancy Edmund Tie & Company, expects a competitive tender with 10 bids.
He noted that the tenant profile of the commercial space in the area has evolved with the completion of mammoth mixed-use development Duo in Bugis and South Beach, a joint venture between CDL and Malaysia's IOI Group.
These have brought firms such as pharmaceutical group Sanofi, Rabobank and Mastercard into the area, he said, adding that the makeover of the Kampong Bugis area will also boost development.
"While the construction costs of the underground linkway and the conservation of the former Beach Road Police Station may be a concern to some developers, the conserved building may be an opportunity for the developers to leverage on its heritage to deliver a unique work, live and play concept," he said. The tender closes at noon on Sept 28.