reporter2
17-04-12, 23:20
http://www.businesstimes.com.sg/archive/wednesday/premium/singapore/whopping-14-bids-aljunied-industrial-site
Published April 11, 2012
Whopping 14 bids for Aljunied industrial site
Top bid of $255.44 psf ppr despite new conditions on strata sub-division
By Mindy Tan
A 0.63 hectare (ha) industrial site at the junction of Sims Drive and Aljunied Road drew a whopping 14 bids, and a top bid of $43.4 million, or $255.44 per square foot per plot ratio (psf ppr) by Fragrance Biz Space, in spite of the new conditions on strata sub-division for industrial parcels, which came into effect in January.
Assuming Fragrance is awarded the tender, this will be the group's maiden industrial project.
Analysts were largely unsurprised by the good turnout, given the site's qualities.
The site is located in a 'mature estate, and it's a smallish development, that's why tendering was so aggressive. It shows industrial developments are still very strong, even though the government has put in place various new measures,' said Colliers International director (industrial) Tan Boon Leong.
Given that this site is located next to Aljunied MRT, developers will not be allowed to strata sub-divide the development in the first 10 years after the project is completed. For strata sub-divisions after the period, developers must adopt a minimum strata unit size of 1,615 sq ft GFA.
Despite these measures, developers are still bidding as the site's fundamentals, in particular its location, are strong, stressed Mr Tan.
Savills Singapore's director Dominic Peters agreed: 'This is one of the better locations outside of the central business district, and, the site is relatively small.'
The second highest bid, put up by Mezzo Development, came in at $35 million, or $206.05 psf ppr.
According to Mr Peters, that the top bid was 24 per cent higher than the second bid could be due to the strata sub-division controls.
Mr Tan attributed it to eagerness on Fragrance's part to enter the field, suggesting that the site was probably deemed by the group to be the best of this half's pickings, and that they cannot afford to always come in second.
In March, the firm's bid for a 0.8 ha industrial site at Serangoon North Avenue 4 was bested by Soon Hock Property Development by a mere 0.4 per cent.
In the event Fragrance is awarded the tender, Mr Tan suggested it might rent it out, before deciding to sell it to a real estate investment trust (reit) or end-user.
'It's harder to find an end-user for an entire building, so they may lease out the project to a few parties and exit via a reit if they cannot wait 10 years. But, if rental is good, they might hold onto it as an investment vehicle,' said Mr Tan.
He estimates rental in the area to be in the range of $2.80 psf and $3.50 psf.
The breakeven price for the project should be in the range of $400 psf to $430 psf, said Mr Tan.
The lowest bid for the site came from Elitist Development, at $51.56 psf ppr.
The 0.63 ha site has a maximum permissible gross plot ratio of 2.5, and a lease period of 60 years. It is zoned Business 1.
Published April 11, 2012
Whopping 14 bids for Aljunied industrial site
Top bid of $255.44 psf ppr despite new conditions on strata sub-division
By Mindy Tan
A 0.63 hectare (ha) industrial site at the junction of Sims Drive and Aljunied Road drew a whopping 14 bids, and a top bid of $43.4 million, or $255.44 per square foot per plot ratio (psf ppr) by Fragrance Biz Space, in spite of the new conditions on strata sub-division for industrial parcels, which came into effect in January.
Assuming Fragrance is awarded the tender, this will be the group's maiden industrial project.
Analysts were largely unsurprised by the good turnout, given the site's qualities.
The site is located in a 'mature estate, and it's a smallish development, that's why tendering was so aggressive. It shows industrial developments are still very strong, even though the government has put in place various new measures,' said Colliers International director (industrial) Tan Boon Leong.
Given that this site is located next to Aljunied MRT, developers will not be allowed to strata sub-divide the development in the first 10 years after the project is completed. For strata sub-divisions after the period, developers must adopt a minimum strata unit size of 1,615 sq ft GFA.
Despite these measures, developers are still bidding as the site's fundamentals, in particular its location, are strong, stressed Mr Tan.
Savills Singapore's director Dominic Peters agreed: 'This is one of the better locations outside of the central business district, and, the site is relatively small.'
The second highest bid, put up by Mezzo Development, came in at $35 million, or $206.05 psf ppr.
According to Mr Peters, that the top bid was 24 per cent higher than the second bid could be due to the strata sub-division controls.
Mr Tan attributed it to eagerness on Fragrance's part to enter the field, suggesting that the site was probably deemed by the group to be the best of this half's pickings, and that they cannot afford to always come in second.
In March, the firm's bid for a 0.8 ha industrial site at Serangoon North Avenue 4 was bested by Soon Hock Property Development by a mere 0.4 per cent.
In the event Fragrance is awarded the tender, Mr Tan suggested it might rent it out, before deciding to sell it to a real estate investment trust (reit) or end-user.
'It's harder to find an end-user for an entire building, so they may lease out the project to a few parties and exit via a reit if they cannot wait 10 years. But, if rental is good, they might hold onto it as an investment vehicle,' said Mr Tan.
He estimates rental in the area to be in the range of $2.80 psf and $3.50 psf.
The breakeven price for the project should be in the range of $400 psf to $430 psf, said Mr Tan.
The lowest bid for the site came from Elitist Development, at $51.56 psf ppr.
The 0.63 ha site has a maximum permissible gross plot ratio of 2.5, and a lease period of 60 years. It is zoned Business 1.