Club Street hotel site draws top bid of $562m

A plum hotel site along Club Street in the Central Business District drew interest from hotel groups in Singapore and the region, resulting in a record price being set for 99-year leasehold land at a state tender.

The eight bids were short of the dozen or more some market watchers had been expecting, but the top bid of $562.2 million, by Worldwide Hotels Group's Midtown Development, translates to $2,148.50 per sq ft per plot ratio (psf ppr), the highest for a 99-year leasehold site offered in a Government Land Sales tender, said analysts.

However, in the housing land segment, it was a tale of two cities.

The top bid for a private housing site in Kampong Java Road near Newton MRT station, $418.38 million or $1,192.25 psf ppr, came in below market expectations, reflecting the caution setting in among developers amid the current supply-demand imbalance.

However, developers were a lot more sanguine about the executive condominium (EC) segment, which has seen a dearth of new launches, yet enjoys strong buyer demand.

The top bid for an EC site in Tampines Avenue 10 came in at $434.45 million or $578.12 psf ppr, within expectations and in line with winning bids in previous state tenders for EC sites.

All three sites have 99-year leases.

Worldwide Hotels, controlled by the Choo family, encompasses brands such as Hotel 81, V Hotel, Hotel Boss and Venue Hotel, and owns 38 hotels in Singapore and another eight in the Asia-Pacific. Its managing director, Ms Carolyn Choo, said the group envisages a four-star property that will be its landmark hotel for the Club Street site.

She declined to say how many hotel rooms are planned under the group's proposed scheme, but said there will be a commercial component comprising food and beverage and retail space. She estimates the total investment in the project, including construction, interest and fitting-out expenses, would be in the high $700 million range.

"The premium paid for the Club Street site is likely due to the fact that it is one of the few remaining centrally located sites available for hotel development," said Mr Giuliano Esposito, JLL Hotels & Hospitality's senior vice-president of strategic advisory and asset management.

The top bid was 12.4 per cent higher than the second-highest offer, from a partnership between UOL Group and United Industrial Corporation. Shangri-La Group is understood to be behind the third-highest bid.

As for the Kampong Java site, it drew seven bids. The top bid from Chip Eng Seng unit CELH Development was a tad above the second highest from GuocoLand. Chip Eng Seng Corporation group chief executive Raymond Chia said the group plans to develop a project with about 380 units, ranging from one-to four-bedders.

The EC site in Tampines fetched seven bids. The highest, from a partnership between Hoi Hup Realty and Sunway Developments, was a tad higher than the second highest from MCC Land (Singapore) of $431.62 million or $574.36 psf ppr.

Ms Tricia Song, head of research for Singapore at Colliers International, noted that the top bid of $578 psf ppr is the second highest on record for EC land, after Sumang Walk's $583 psf ppr in March last year.

She said the outcome of this batch of tenders reflects the impact of last July's cooling measures, which saw developers shift their focus to the hotel and EC sectors amid a brighter outlook for tourism and the continued appeal of ECs.

"ECs have remained popular with developers post-measures, given the limited supply. The new minimum average unit size of 85 sq m should also have minimum impact for ECs as ECs are targeted at families in the first place, and the average unit size suggested by the development cap of 700 units is well above the 85 sq m," she added.

Correction note: An earlier version of this article stated that the top bid for a private housing site in Kampong Java Road came up to $578.12 psf ppr. It should be $1,192.25 psf ppr. We are sorry for the error.

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A version of this article appeared in the print edition of The Straits Times on January 16, 2019, with the headline Club Street hotel site draws top bid of $562m. Subscribe