Published September 29, 2012

Far East, UIC, Sim Lian vying for NOL Building

By Kalpana Rashiwala

FAR East Organization, United Industrial Corporation and Sim Lian are among the parties vying for the freehold NOL Building at Alexandra Road, BT understands.

Negotiations are said to be underway to up the price to as close as possible to the $400 million level, the indicative pricing reported when the building was put up for sale in early July by its owner, Neptune Orient Lines (NOL) Group.

An expression of interest closed in August, which is thought to have attracted over 10 offers. Of these, talk in industry circles is that three parties were shortlisted to take part in a final bid submission which closed about a fortnight ago.

The highest price attained so far is thought to be in the high $300 million range but still short of $400 million.

A market watcher reckons the highest price could be somewhere in the $380-390 million range. Besides looking at pricing, NOL would probably be weighing conditions listed by the contenders - including whether NOL can lease back space in the property for its operations and for how long.

The 26-storey office block's existing net lettable area (NLA) is 207,505 sq ft. It is on a 108,060 sq ft site that is zoned for commercial use under Master Plan 2008.

The building's existing gross floor area (GFA) of 294,500 sq ft is just 8,068 sq ft shy of the maximum 302,568 sq ft allowed for the site, based on the site's 2.8 plot ratio under Master Plan 2008.

Even so, there is potential to redevelop the building, as this could boost its NLA by about 52,700 sq ft arising from a higher efficiency ratio (or ratio of NLA to GFA) of about 86 per cent achievable on a brand-new project, compared with slightly above 70 per cent currently.

Market watchers reckon that contenders for the building are likely to look at redeveloping the site into a new commercial project with a view to strata titling the space into smaller units for sale to meet high demand for strata offices and shops.

Assuming NOL Building is redeveloped, the $400 million indicative pricing reflects a unit land price of about $1,332 per square foot per plot ratio (psf ppr) inclusive of estimated development charges of $3 million.

In May, Fragrance Group clinched Tower 15 at Cantonment Road for $360 million, or about $1,420 psf ppr based on the 29-storey freehold building's existing 253,455 sq ft GFA. No development charge would be payable for a new project on the site if it does not exceed this GFA. The site is zoned for commercial use.