Mohamed Sultan office site draws aggressive bids

http://www.businesstimes.com.sg/sub/...28740,00.html?

Published March 19, 2010

Mohamed Sultan office site draws aggressive bids

By EMILYN YAP


THE Urban Redevelopment Authority (URA) yesterday received surprisingly high bids for a transitional office site at Mohamed Sultan Road.

The 15-year leasehold plot attracted three bids. The highest was $17.19 million, or $172 per sq ft per plot ratio (psf ppr), from a boutique property developer and sports fashion retailer Link (THM) Holdings Pte Ltd.

Yesterday's top bid was eye-catching on several counts. First, it was 3.7 times that of the sole bid which URA received in 2008 when it last tried to sell the site. That bid, at just $4.65 million, was rejected.

Second, it far exceeded the trigger price for the site. URA put the site up for tender again in February after a developer committed to pay at least $9.33 million for the land.

The other two bids which came in yesterday were also higher than the trigger price. OKH Management Pte Ltd, a unit of building contractor OKH Holdings Pte Ltd, offered to pay $13.29 million, or $133 psf ppr.

The third bid, at $11.16 million or $112 psf ppr, came from Agrow Investments Pte Ltd.

The results of yesterday's tender 'exceeded expectations' and reflects confidence about the office market, said Savills Singapore commercial leasing director Agnes Tay.

The office site spans 66,482 sq ft and has a maximum gross floor area of 99,728 sq ft. Ms Tay estimated that with construction costs, total investment in the site could come up to around $32.2 million.

This would translate to a breakeven rental of around $2.50-$3.00 psf over 14 years - the amount of lease remaining when the site is ready in about a year's time. This would be 'appealing to many office users, especially big organisations who appreciate less volatility in rents over time', she said.

Cushman & Wakefield Singapore managing director Donald Han also described the bids for the site as 'aggressive'. The top bidder is perhaps confident of controlling construction costs, he said.

According to Link (THM)'s website, the company has developed a number of landed homes in Districts 9, 10 and 11. Its latest launches include a good class bungalow at Astrid Hill and semi-detached houses at Holland Road.

Link (THM) also distributes bags by brands such as Nike and Adidas. It has shops in VivoCity, Jurong Point and other malls.

Mr Han added that by the middle of next year, when the office space is completed, rents in the market would probably have picked up.

http://www.straitstimes.com/Money/St...ry_503918.html

Mar 19, 2010

Office site bid hits $17.2m


THE tender for a transitional office site in Mohamed Sultan Road closed yesterday with a top bid almost four times greater than an offer received in 2008 when the property failed to sell.

Boutique development firm Link (THM) Holdings bid $17.19 million, or $172.37 per sq ft (psf) of gross floor area.

That was nearly 30 per cent above the second highest bid of $13.29 million, or $133.26 psf of gross floor area, from OKH Management.

Agrow Investments was last with $111.86 psf, or $11.16 million, yet that was still well ahead of the $4.65 million offered - and rejected - for the site in 2008.

The land between Kim Yam and Martin Roads comes with a shorter-than-usual 15-year lease.

It can accommodate a four-storey building with a total floor area of almost 100,000 sq ft.

The site was triggered for launch in late January at a minimum price of $9.33 million.

Property experts had suggested then that response may not be strong given the ample office supply in the market and that the minimum bid was twice the 2008 bid.

The site was launched in August 2008, when it was on the confirmed list. The Urban Redevelopment Authority received just that one bid of $4.65 million from RSP Architects Planners & Engineers but rejected it as too low.

It transferred the site to the reserve list in October that year.

Cushman & Wakefield Singapore managing director Donald Han said the top bidder this time is probably keen to keep some of the space for its own use.

'They will have to control their costs well, as their total bill could come up to about $400 psf,' he said, adding that apart from the land cost, construction expenses will likely amount to $150 to $180 psf.

Rents in the office sector are almost at the bottom of the cycle. The development may be completed by the middle of next year, when office rents may recover, said Mr Han. 'If they can lease out at $5.50 psf, they can get a yield of about 10 per cent.'

JOYCE TEO