Hong Kong tycoon Li Dak-sum’s Carlton group yesterday emerged as the top bidder for a 99-year hotel site at Gopeng Street next to the Amara Hotel

Hong Kong tycoon Li Dak-sum’s Carlton group yesterday emerged as the top bidder for a 99-year hotel site at Gopeng Street next to the Amara Hotel in the Tanjong Pagar area. Carlton put in a $123 million bid.

The only other offer for the site came from Republic Hotels and Resorts, part of Millennium & Copthorne Hotels plc, which bid $118.21 million.

Carlton’s bid works out to $573 psf per plot ratio, which market watchers say is the highest for a 99-year hotel site in recent years.

In November last year, Hong Leong Group bagged a site at Mohamed Sultan Road for $518 psf per plot ratio.

In January this year, Far East Organization paid $501 psf ppr for a hotel plot next to Novena MRT Station.

Mr Li’s son, Richard, who is managing director of Carlton Hotel (S) Pte Ltd, yesterday evening told BT that the group expects to pump a further sum of $140 million in construction costs and fees for its proposed hotel development at Gopeng Street, bringing the all-in cost to around $263 million.

‘We are looking at two scenarios - a limited service hotel with about 400 rooms or a more up-market, hip hotel, with about 380 rooms,’ Richard Li said, indicating that for now, the group is more inclined towards the former option as ‘there are not many of this type of hotels’.

If the group goes for a 400-room hotel, the break-even cost would be $657,000 per room, which hotel analysts say is one of the highest for a hotel development or transaction in Singapore in recent years. ‘For instance, the Intercontinental Singapore last year changed hands for $611,000 per room, and the recent sale of Novotel Clarke Quay was reported at $552,000 per room,’ HVS International Singapore managing director David Ling observes.

Carlton’s bid reflects its confidence in the Singapore tourism sector, he said.

‘The market is conducive for new hotel developments now that we have concrete plans going ahead - two integrated resorts with casinos, Formula 1. These are all positive demand generators coming on line,’ Mr Ling reckons.

Mr Li of Carlton Singapore acknowledges that his group’s bid at yesterday’s state tender was high but ‘we wanted to get the site’, he said.

‘We basically want to do another hotel in Singapore,’ he said. ‘Of course, based on today’s room rates, the venture is not very profitable. But we expect demand to be higher in the years to come.’

Mr Li indicated the group does not have plans for further hotels in Singapore for the time being.

In early 2005, Carlton clinched a plot next to its Carlton Hotel at Bras Basah Road for $55.6 million. It recently began construction on the site for a 300-room extension to the existing hotel.

The total cost for developing the new wing (inclusive of the land price) is about $175 million, reflecting a cost per room of about $583,000. The extension is expected to be ready around 2009.

The 25,543 sq ft site site at Gopeng Street can be developed up to 30 storeys high.

It could be completed around 2010.

Source: The Business Times, 29 May 2007