Marina View site awarded to Malaysia's IOI Properties for $1.508 billion

IOI Properties Group was the site's sole bidder.
IOI Properties Group was the site's sole bidder.PHOTO: ST FILE

SINGAPORE - A plum site at Marina View has been awarded to its sole bidder - a unit of Malaysia's IOI Properties Group - for $1.508 billion.

The bid of $1,508,000,101 was just $101 above the $1.508 billion minimum price that triggered the launch of the 99-year leasehold plot, the Urban Redevelopment Authority said on Wednesday (Sept 29). That works out to a land rate of $1,379 per square foot per plot ratio (psf ppr), analysts say.

The white site - intended for a mixed-use development with residential, hotel, commercial and/or serviced apartments - was released under the reserve list of the first-half 2021 Government Land Sales programme. It can yield 905 private homes, 2,000 sq m in gross floor area (GFA) of commercial space and 540 hotel rooms.

Analysts noted the single bid and suggested developers have turned cautious due to the site's hefty land and development costs and uncertainty over office and hotel sectors in the Central Business District (CBD).

"This tender award establishes the fact that the (Government) is willing to award a site so long as the developer meets its criteria and minimum reserve price - regardless of whether it was hotly contested or not," said PropNex Realty chief executive Ismail Gafoor.

The site's location "presents a rare opportunity for the tenderer to capitalise on the relatively limited supply of residential units in this prime location. As of the end of the (second quarter), there were less than 700 unsold units from four projects in the downtown core," Mr Gafoor added.

The average selling price of private residential units in the new development is expected to surpass $2,600 psf, analysts say.

Mr Wong Xian Yang, head of research for Singapore at Cushman & Wakefield, said the development is in line with plans to rejuvenate the CBD by injecting more mixed uses.

The last major project launched in District 1 was Marina One Residences, which is now more than 90 per cent sold, he added.

Mr Mark Yip, chief executive of Huttons Asia, said: "The Government probably considered the broader objective of increasing the 'live' component of 'work live play' in the CBD. They are determined to make this happen. This may act as the catalyst to transform the whole CBD."

ERA research and consultancy head Nicholas Mak said the developer may focus first on building apartments, in light of the challenges facing the hospitality sector.

"The developer will have to sell a large number of units - between 1,250 and 1,300 units," he added.

IOI Properties, which has developments in Malaysia, Singapore and Xiamen, is developing another white site in Central Boulevard that it acquired for $2.57 billion in November 2016 after triggering its release with a minimum bid of $1.536 billion. That worked out to a land rate of $1,689 psf ppr.

The group has a total development landbank of about 4,000ha. IOI manages 6.7 million square feet of lettable area, comprising shopping malls, retail spaces and offices.