Friday, July 27, 2007

Beach Road site draws 7 bids from big-name developers

Some even put in two bids to boost chances of winning historic 3.5ha plot

PROPERTY heavyweights have come out in force to vie for a plum commercial site in Beach Road - seen by some as the last iconic site in town.

Competition is so keen in the current red-hot market that some developers submitted two bids in the hope of increasing their chances. The historic 3.5ha site is just up the road from Raffles Hotel and could fetch $1.5 billion.

The Urban Redevelopment Authority (URA) yesterday released the names of the seven tender submissions it had received by the time the tender closed. It will award the tender after evaluating design concepts and then considering the prices submitted by those bids with acceptable designs.

‘This is a high-quantum site. The fact that it attracted seven submissions shows Singapore is still a very attractive investment destination,’ said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.

Among the big names, Indonesia’s Lippo Group - which already has extensive interests in Singapore - and Keppel Land (KepLand) put in two proposals each.

Lippo submitted its proposals under Beach Development and Nicoll Development.

KepLand tied up with a partner, Billion Rise - believed to be a vehicle for Hong Kong giant Cheung Kong Holdings, another foreign group with interests in Singapore - for both of its bids. It tendered under Ocean & Capital Properties and Mansfield Developments.

CapitaLand submitted its proposal under various parties, all featuring the name ‘Brilliant’.

The sixth proposal was from Colonnade Properties and Beacon Strategic Investments. This is led by Pontiac Land’s Pontiac Investments.

The seventh bid came from City Developments’ Scottsdale Properties, Dubai World’s Istithmar Beach Road FZE and Elad Group Singapore.

The site can be built up to a gross floor area of 146,827 sq m and allows for a high-quality mixed-use development featuring mostly prime office space and hotel rooms.

Property experts say it is a large site affording the opportunity for an eye-catching development. Some believe it is the last iconic site in town - so some of the bids could be high, at $1.5 billion or more, they said.

When the tender was launched in March, consultants had said the site could fetch $1 billion to $1.4 billion. URA had said the hotel and office space will add to the critical mass of such space in the area.

Singapore faces a shortage of prime Grade A office space. Yesterday, Savills put out a report saying vacancy rates for prime Grade A office buildings have fallen to 1 per cent in the second quarter - the lowest level in a decade - from 2.8 per cent in the first quarter.

Indeed, at least until 2010, the vacancy rate for Grade A office space is expected to remain below 3 per cent, it said.

‘The shortage is in Grade A space. There’s still some space in Grade B buildings and outside the prime areas,’ said Savills director of corporate real estate Simon Hill.

Landlords will continue to dominate the market, pushing rents up by another 20 to 30 per cent by year-end.

Source: The Straits Times, 26 July 2007

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