Govt to offer two 99-year leasehold sites

Published March 21, 2007

Govt to offer two 99-year leasehold sites

Move expected to ease office space crunch

By KALPANA RASHIWALA


THE tight office supply situation may ease as a result of two 99-year leasehold sites being offered by the government - a reserve list site on Anson Road, behind the Icon condo, and a confirmed list plot at Tampines Regional Centre.

The first offers an opportunity to develop a prime office building in the Tanjong Pagar area, at the gateway to the Central Business District, with good-size floor plates of about 18,300 sq ft.

The second is in an established back-office hub for financial institutions and business support services.

CB Richard Ellis expects the Anson Road site to contribute about 330,000 sq ft of offices and the Tampines plot about 300,000 sq ft.

The Anson Road plot, being on the reserve list, will only be launched for tender if a developer undertakes to bid at a minimum price acceptable to the state.

CBRE expects the site to be awarded for about $850-$900 psf of potential gross floor area, translating to an absolute land bid of $326 million to $345 million.

CBRE executive director Li Hiaw Ho said this is the second reserve-list commercial plot at Anson Road that is open for application.

Knight Frank director (consultancy and research) Nicholas Mak predicts the site will fetch $850-$950 psf ppr. Based on the lower end of this range, the breakeven cost for a new office project could be $1,790 psf.

Assuming that monthly gross rents for new office space in the location rise from the current $8 psf to $10 psf by the time the development is completed, the net yield could work out to about 5.4 per cent.

Mr Mak reckons the site will appeal to mid-size developers, tie-ups between funds and developers, and joint ventures between funds and contractors.

But he points to one drawback - the plot's triangular shape, which means that while the side facing Anson Road has good frontage, the other two sides are without much of a view.

As for the Tampines plot, Mr Mak predicts a slightly lower bid of $750-$850 psf per plot ratio. 'This site is likely to be fairly popular, with about four to six bids,' he said.

CBRE's Mr Li reckons the Tampines site could be awarded in excess of $500 psf ppr, working out to over $180 million. The tender for this plot closes on May 15.

While the two sites announced yesterday will help ease the office shortage, the plot that CBRE's Mr Li and other market watchers are waiting for is at Central Boulevard, just behind the One Shenton condo. This could be potentially developed into about 930,000 sq ft of offices and is slated for launch only in May.

'In view of the critical shortage of office supply, the market is also hoping that the government would accelerate the land sales programme,' Mr Li said.

CBRE figures show Grade A office rent has risen 20.8 per cent since the end of last year to an average $10.55 psf a month now.

The increase over the year-ago period has been a staggering 75.8 per cent, which has sparked concerns in some quarters about Singapore losing its competitiveness.

March 21, 2007

CBD, Tampines office sites set to go on market

By Fiona Chan


TWO land plots where developers can build new office buildings are set to come on the market soon.

One is in the Central Business District while the other is in Tampines Regional Centre.

The CBD plot is at the junction of Anson Road and Enggor Street, behind the upcoming Icon condominium.

It has a land area of 39,000 sq ft and can host an office building with a total floor area of about 383,000 sq ft.

The plot's size will also allow 'good-sized floor plates of about 18,000 sq ft', a coveted feature in office blocks, the Urban Redevelopment Authority (URA) said.

The URA released this 99-year leasehold site on to its reserve list yesterday. Interested developers can apply to have the site launched for public tender by submitting a bid that meets the URA's reserve price.

Property consultants expect keen interest in this plot, in view of the acute supply crunch in prime office space.

Mr Li Hiaw Ho, executive director of CB Richard Ellis Research, said that top bids for the land are likely to be between $326 million and $345 million, or about $850 to $900 per sq ft per plot ratio (psf ppr).

The site is 'likely to be popular with medium-sized developers, or joint ventures between funds and developers or contractors', added Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Meanwhile, the HDB is launching another 99-year leasehold office site, at Tampines Grande, today.

The 86,000 sq ft plot is located next to the AIA Building on Tampines Avenue 5. It can be built up to 360,000 sq ft of gross floor area.

Mr Mak expects this Tampines site to be 'fairly popular', with about four to six bids ranging from $750 to $850 psf ppr.

Regional centres such as Tampines are also seeing an increase in demand for office space as rising rents in the central areas force firms to relocate some operations.

'There could be demand from financial firms for their backroom operations in non-CBD areas where the cost is lower,' he said.