The Urban Redevelopment Authority has put another hotel development site on the Government Land Sales reserve list. The move comes on the back of a strong performance by the hotel sector, based on the latest Singapore Tourism Board figures.

STB revealed that hotels here generated $162.1 million of room revenue in March - 28 per cent more than a year earlier and the highest monthly figure since 1995.

The average room rate increased 24.5 per cent in March from a year earlier to a record $194, surpassing the previous high in September last year.

The average occupancy rate was 91 per cent in March, up 2.9 per cent from March 2006.

As such, demand for new hotel sites is expected to be high. The latest site on the reserve list is at the junction of Victoria Street and Jalan Sultan. The 73,424.9 square foot site has a plot ratio of 4.5 and a maximum gross floor area of 330,408.7 sq ft.

Savills Singapore director of investments Steven Ming reckons that the land could be worth $500-550 per sq ft per plot ratio (psf ppr). In November 2006, the Hong Leong Group paid $520 psf ppr for a site in Mohamed Sultan Road.

There are now six hotel sites on the reserve list. There is also one site in Tanjong Pagar that is already open for tender. Apart from these, there are sites on the confirmed list with a hotel component, and more sites on the reserve list coming up later this year.

Mr Ming believes that there should be demand for the sites. ‘We do not think that there are too many hotel sites given the current high average occupancy rate and expected strong growth in the number of tourist arrivals to Singapore,’ he said.

Savills estimates that a 400-450 room hotel is feasible on the latest site, with the cost of each room coming in around $350,000-400,000. ‘This is on the assumption that the winning developer builds a 4-star hotel on the site,’ Mr Ming said.

Jones Lang LaSalle Hotels executive vice-president Chee Hok Yean also thinks a 450-room hotel is likely.

On the supply of hotel rooms, Ms Chee said: ‘Sites released now will take three years before the hotel will be completed and this is in line to meet the expected increase in tourist arrivals.’

Going by STB’s figures, visitor numbers are growing. In March, Singapore welcomed 835,000 visitors, a 1.9 per cent increase from a year earlier and a record for the month.

Source: The Business Times, 26 April 2007