Sim Lim Square is keeping its sale tender open for an extra month to give potential buyers more time to assess if the commercial site on Rochor Canal Road can be turned into a mixed-use project that could include a hotel.
The move comes as the area undergoes a makeover in the wake of high demand for hospitality assets and new guidelines that urge developers to explore how older buildings can be gentrified.
The redevelopment potential for Singapore's gadget central has attracted about 10 queries from developers and investment funds for its $1.25 billion collective sale tender.
The tender was due to have closed on Monday but it will now stay open until 3pm on July 22.
This will give potential bidders "more time to explore converting the commercial site into a mixed-use space, including a hotel with upwards of 500 rooms", Mr Francis Tan, chief investment officer of real estate consultancy SLP Scotia, told The Straits Times yesterday.
Six-storey Sim Lim Square, with 492 units across a floor area of 22,007 sq m, was completed in 1987 and soon became known for its electronics and IT goods and services retailers.
The 7,260 sq m plot is fully zoned for commercial use, so there is no mandatory requirement to top up the lease, which has 63 years left, Mr Tan added.
7,260 sq m
Land size of Sim Lim Square.
Reserve price of the collective sale via public tender.
Developers can explore converting the property for other uses under the Urban Redevelopment Authority's Strategic Development Incentive (SDI) scheme announced on March 27.
The scheme, which is aimed at encouraging the redevelopment of older commercial or mixed-use buildings in areas such as Orchard Road, the Central Business District and Marina Centre, allows applicants to apply for a change in land use, plot ratio and building height.
"Developers can get bonus gross floor area should they qualify under the SDI scheme. But they have to get clarification on what constitutes a strategic development... how much they can earn out of it, then they will make a bid," said Mr Vikas Gupta, chairman of the mall's collective sale committee.
Sim Lim Square is at the apex of the Ophir-Rochor Corridor, near the commercial precinct in the Bras Basah-Bugis area and the historical district of Kampong Glam.
The area is undergoing significant changes. The tight supply of new hotel rooms and stronger tourism performance have resulted in some developments near Rochor Canal Road, where Sim Lim Square is, being converted into hotels.
One example was the sale en bloc in November of Golden Wall Centre for $276.2 million to Worldwide Hotels, which owns and runs chains like Hotel 81.
But there are signs that commercial collective activity is slowing and that large sites in particular could face challenges due to their hefty prices and high retail vacancy rates for some.
A number of commercial buildings, including Jalan Besar Plaza and Verdun House, have closed their collective sale tenders without a deal. Golden Mile Complex closed its second tender in April without a bid.
Savills Singapore research head Alan Cheong noted: "If the price is right, developers would have bitten. If the quantum is huge, buyers will have to see how they can extract value from the land, and one way is to do a change of use."
But Mr Vikas remains confident. He said: "We did consider our reserve price carefully. We are four times bigger than Golden Wall Centre, and there are factors to support our asking price."