URA rejects sole bid for Mohd Sultan office site

http://www.businesstimes.com.sg/sub/...01247,00.html?

Published October 15, 2008

Only one bid received for transitional office site


THE tender for a transitional office site in Mohamed Sultan Road has closed with only one bid of $4.65 million, from RSP Architects Planners and Engineers.

Based on the 66,482 sq ft site and maximum permissible gross floor area (GFA) of 99,727.5 sq ft, the bid equates to a unit land price of $46.67 per sq ft per plot ratio (psf ppr).

Knight Frank director (research and consultancy) Nicholas Mak said this is the second-lowest bid received for such a site.

In January, a site at Aljunied was not awarded after the Urban Redevelopment Authority (URA) rejected the sole bid of $38.37 psf ppr.

Mr Mak said RSP's bid reflects the 'turbulence in the markets and the knowledge that there is a lot of supply coming up'. He doubts URA will award the Mohamed Sultan Road site as it might encourage opportunistic bidding, especially as the tender for another transitional office site is set to close next month.

Transitional office sites were introduced in 2007 as a stopgap measure to address an office space crunch.

RSP's present office is in Scotts Road. It would likely build an office for its own use on the Mohamed Sultan site, though Mr Mak said that based on the permissible GFA, it would also be looking to lease out the remaining space.

The low bid comes as a surprise, especially as Mohamed Sultan is considered a central location.

Cushman & Wakefield managing director Donald Han said he expected bids to be at least half of those for two previous transitional office sites around Newton MRT, which were awarded at $242.50 and $226 psf ppr in April and May.

'There is a chance the site will not be awarded as it would distort property prices,' he said.

Perhaps more importantly, the market appears to have reached saturation point as far as demand for transitional office sites goes. 'This will send a strong signal to URA,' Mr Han said.

http://www.straitstimes.com/Money/St...ry_290638.html

October 15, 2008 Wednesday

Just one bid for Mohamed Sultan Road office site

By Joyce Teo


A TENDER for a transitional office site - aimed at easing the office squeeze in Singapore - in Mohamed Sultan Road has closed with just one bidder, and at a far lower-than-expected offer of $4.65 million.

The price for the 6,176 sq m plot, which has a 15-year lease, works out to $46.67 per sq ft of gross floor area. It came from local firm RSP Architects Planners & Engineers.

'The bid is only one-fifth of the average land prices of the two Scotts Road sites which were awarded in April and May this year,' said Knight Frank's director of research and consultancy Nicholas Mak.

'It is very conservative so there is a good likelihood that it may not be awarded.'

When the site was launched for tender in mid-August, Mr Mak had expected the bids to come in at between $10 million and $13 million. Another consultant had expected even higher bids of up to $18 million.

However, consultants generally agree that interest in such office sites will be subdued, given the poor market sentiment and the large supply of office space expected in 2010.

A building on the Mohamed Sultan site could be built in around a year, which is near the time when more office supply from buildings such as Marina Bay Financial Centre will pour into the market.

The Urban Redevelopment Authority will announce its decision at a later date, after it has evaluated the bid.

Earlier this year, the URA rejected the only bid - at $7.8 million or $38.35 per sq ft of gross floor area - submitted for a transitional office site in Aljunied Road because it was too low.

This Mohamed Sultan site is one of three commercial plots slated for sale through the confirmed list in the second half of the year. Confirmed list sites go up for tender on scheduled dates, regardless of developer interest.

The tender for a second transitional office site on the list, in Mountbatten Road, was launched last month and will close on Nov 18.

http://www.businesstimes.com.sg/sub/...02069,00.html?

Published October 22, 2008

URA rejects sole bid for Mohd Sultan office site

By ARTHUR SIM


THE Urban Redevelopment Authority has rejected the sole bid - submitted by RSP Architects Planners & Engineers - for a transitional office site in Mohamed Sultan Road, as the price offered was too low. The tender for the site closed a week ago, with RSP bidding $4.65 million.

Based on the 66,482 sq ft site and maximum permissible gross floor area (GFA) of 99,727.5 sq ft, RSP's bid equated to $46.67 per sq ft per plot ratio (psf ppr).

Only one other transitional office site, at Aljunied, has drawn a lower bid - of $38.37 psf ppr in January. This site was also not awarded.

DTZ senior research director Chua Chor Hoon said: 'URA's decision not to award is expected because of the very low and lone bid. The low bid reflects the poor sentiment in the office sector, which is facing weakening demand and substantial supply in the pipeline.'

According to DTZ, island-wide average office occupancy eased 0.6 of a percentage point in the third quarter of this year to 96.3 per cent on a quarter-on-quarter basis.

The average office rent also peaked in Q3, with no rental growth during the quarter, DTZ noted.

On the need for alternative office space, Ms Chua said: 'Transitional office sites are like Executive Condominiums. They have a part to play only during certain stages of a property cycle, when office rents and residential prices rise too much and become out of reach for some occupiers. Now the office sector is weakening and the concern is about falling rents and prices, transitional office sites would not be relevant.'

The rejection of RSP's bid does not bode well for the future of transitional office sites.

'The sale of transitional office sites, which started last year, was a novel idea but has less relevance today,' said Cushman & Wakefield managing director Donald Han. 'The operating environment has changed from one that is of a supply crunch to one of sustainable demand - all within the past 18 months. That being said, for demand to sustain, business costs, such as occupancy costs, should be kept affordable to ensure the viability of businesses.'

Asked to comment, a URA spokesman said yesterday: 'There is an ongoing tender for another transitional office sale site in Mountbatten Road, which closes on Nov 18. The government will be evaluating the market response to recent tenders and the demand for transitional office sites as part of the process of planning the next Government Land Sales programme.'

http://www.straitstimes.com/Money/St...ry_293359.html

October 22, 2008 Wednesday

'Low' bid for Mohamed Sultan office site rejected


A SOLITARY bid for a transitional office site in Mohamed Sultan Road that came in way below market expectations has been rejected by the Urban Redevelopment Authority (URA) as 'too low'.

Local firm RSP Architects Planners & Engineers had offered $4.65 million - the only bid for the 6,176 sq m site, which has a 15-year lease and is aimed at easing the office supply squeeze here.

At just $46.67 per sq ft of gross floor area, the bid fell far short of market expectations of $10 million to $18 million.

Knight Frank's director of research and consultancy, Mr Nicholas Mak, had last week anticipated that the URA was likely to reject the bid as it was very conservative. This is not the first time a transitional office site bid has been rejected. The URA earlier this year rejected the only bid - of $7.8 million or $38.35 per sq ft of gross floor area - for a transitional office site in Aljunied Road for the same reason.

The Mohamed Sultan Road tender, which closed last week, was launched in mid-August, when sentiment in the office market was already relatively subdued in the light of the global financial crisis.

Property consultants expect to see little interest in transitional sites from here on because a large supply of office space will hit the market in 2010.

But the site was tendered out nevertheless because it was one of three commercial plots on the Government's confirmed list of sites for sale in the second half of this year.

Confirmed list sites go up for tender on scheduled dates, regardless of developer interest. Another transitional office site - in Mountbatten Road - on the confirmed list was launched last month with the tender to close on Nov 18.

Whether the URA will put out more transitional sites in the future will depend on the response to the recent tenders.

A URA spokesman said yesterday that the Government will consider that and the demand for transitional office sites as part of the process of planning the next land sales programme.

As business costs will continue to be a problem, particularly given the financial crisis, the Government may decide that there is still a need for transitional office sites, said Cushman & Wakefield's managing director, Mr Donald Han.

'Such sites are a quick fix to rental problems and there are still bidders...But I would expect it to put it out at a less aggressive pace from now. It may also be tendering more central sites.'

JOYCE TEO