http://www.businesstimes.com.sg/arch...asing-20131022

Published October 22, 2013

Plum school site in Swiss Club area up for subleasing

German European School looking to sublet main campus site; minimum reserve price set at $39m for 26-year lease

By Kalpana Rashiwala [email protected]


Spacious: The school is set on sprawling grounds of 130,216 sq ft on Bukit Tinggi Road, a site zoned for 'educational institution' use under the URA Master Plan 2008. The tender will close on Nov 18.

[SINGAPORE] New and existing players in the foreign school arena looking for a long-term investment in a flagship Singapore campus will soon be able to bid for a 26-year lease for a property surrounded by international schools and near Good Class Bungalow (GCB) areas.

The German European School Singapore (GESS) has launched a tender for a 26-year sub-lease on its main campus at 72 Bukit Tinggi Road in the Swiss Club locale. The minimum reserve price is set at $39 million, which translates to $415 per square foot on the existing gross floor area of 93,969 sq ft for the campus. Situated near the former Turf Club grounds, the 130,216 sq ft site is zoned for "educational institution" use under the Urban Redevelopment Authority's (URA) Master Plan 2008.

The school's enrolment has been on the rise and has outgrown its current premises. Besides the Bukit Tinggi premises, GESS operates a campus on a short-lease site on Jalan Jurong Kechil in the Bukit Batok area.

Selling a long sub-lease for the Bukit Tinggi premises to another educational institution will help the school to fund development of a new campus in Upper Bukit Timah which is expected to be ready in 2017 and which will replace the current two locations.

GESS is currently in talks with the Singapore authorities for allocation of the site for the new campus.

The school has appointed Savills Singapore to find a sub-lessee for the Bukit Tinggi premises. "We expect strong interest in this attractive asset, given that such an offering is rarely brought to the market by the private sector," said Suzie Mok, senior director of investment sales at Savills Singapore. "Currently, the supply of both long- term sites and temporary facilities for educational institutions is made available only by the state. On the demand side, there is growing interest from many educational institutions seeking quality premises on a long-term basis."

The sub-lessee will not be allowed to redevelop the site. The existing buildings and facilities can support an enrolment of up to 800 students.

The property includes seven low-rise blocks, carpark lots, a basketball court, playground and a forum. Two of the blocks were completed in the mid-1980s while the remaining buildings were added in 2000. "The campus is well kept with refurbishments and upgrading programmes implemented in various phases," said Savills.

The tender will close on Nov 18.

The 26-year lease period is expected to begin on Aug 1, 2018, after GESS has begun operating at its new location.

Payment for the lease will also be staggered. After forking out an initial 10 per cent deposit when the contract is awarded (probably some time later this year or early next year), the sub-lessee will pay another 10 per cent on each anniversary of the contract date with the balance to be paid on completion of the lease sale, which is expected in 2018.

Market watchers reckon GESS is selling a 26-year lease term on the Bukit Tinggi property probably because it expects to be awarded a 30-year lease term for its new site in Upper Bukit Timah by the Singapore authorities.

Currently, GESS has a 68-year balance lease term out of a 100-year lease it was granted in 1981 on the Bukit Tinggi property by an entity understood to be linked to Swiss Club Singapore. That entity holds a 999-year leasehold interest (from August 1878) on the site granted by the state.

GESS's two existing campuses have a combined enrolment of more than 1,500 students aged between 18 months and 18 years.

The junior school campus on Jalan Jurong Kechil is for pre-primary and primary school students. It is on land leased from the Singapore Land Authority (SLA) on a 3+3+3 years lease which is due to expire in 2017. The Singapore authorities have informed GESS that no long-term lease can be granted for this location, according to information on the school website.

The main campus on Bukit Tinggi Road, for secondary students and kindergarten kids, has reached its maximum capacity of 800 students and is not large enough for GESS's entire and still-growing student population.

Since 2009, GESS has been working with the Economic Development Board (EDB) on finding a sustainable long-term solution post-2017. It is currently negotiating with the Singapore Government for the allocation of a site in Upper Bukit Timah to build a new school to host its entire student population in a single campus that will be ready in 2017. "We are not allowed to mention the location till the final approval by EDB/URA is given," said a GESS spokeswoman.