A HOTEL site on East Coast Road near I12 Katong has been triggered for sale, with a developer undertaking to put up a bid of at least $160 million.
This translates to $601.41 per square foot per plot ratio (psf ppr) for the 99-year leasehold tenure site. The 88,678.4 sq ft plot has a maximum gross floor area (GFA) of about 266,040.6 sq ft. Notably, the winning bidder will have to conserve and restore the former Joo Chiat Police Station, which sits on the plot.
This - in addition to the site being a rather tight one - could raise construction costs, said CBRE Research associate director Desmond Sim.
The site does have its attractions, however: One is that it is in a heritage area, and the other is the leeway for up to 40 per cent of the total GFA to be turned over to serviced apartments and/or commercial use.
Mr Sim, who said that the winning tenderer is likely to introduce a commercial element to boost his returns, expects the site to attract up to six bidders, with a top bid of around $1,000 psf ppr.
Chee Hok Yean, the executive director and head of hotels at Chesterton Singapore, agreed that the top bidder will likely create a mixed-use development, one that could comprise a mid-tier or upscale hotel, a strata-titled office tower and ancillary retail facilities to maximise the potential of the parcel. She said: "We expect the bids for this site to exceed $1,000 psf ppr. Given the huge investment involved, there are likely to be six to 10 bidders."
Christine Li, who heads research and consultancy at Orange Tee, said that she expects the site to attract a top bid of $850-950 psf ppr and between eight and 10 bidders. A business or three-star hotel offering about 450-500 rooms is likely to be built on the site, she added.
Nicholas Mak, the executive director at SLP International, cited a top bid in the same ballpark - between $880 and $914 psf ppr, and for five to 10 bidders.
In response to expectations in some quarters that the impending supply of hotel rooms in 2015 could overshadow demand, Mr Sim pointed out that the supply of economy hotels for that year is still relatively small.
He also noted that, with the site allowing for the project to take 60 months to complete, the hotel need not be in the market until 2018. "Looking at the projected tourism numbers, it shouldn't be a problem in terms of the number of rooms coming on stream."
But the race to fill rooms in the vicinity may prove keen, given that there are hotels nearby - among them the Grand Mercure Roxy and the Village Hotel Katong.
Another challenge could come from the nearest MRT station, Eunos, being 2km away, said Mr Mak.
He also said that a hotel with 600 rooms would need to provide parking space for coaches and other vehicles. The land parcel, which fronts busy East Coast Road near its junction with Joo Chiat Road, is surrounded by other buildings, he added.
Under the technical conditions of the tender, the successful tenderer will be required to provide an additional 106 car parking lots for public use, over and above the prevailing minimum number of lots.
The public tender for the site will be launched in about two weeks and last about eight weeks.