Source : Straits Times - 17 Jul 2008
Financial climate and site’s high development requirements may be behind poor showing
A SPRAWLING Balestier Road hotel site integrated with a park attracted just three bids, all well under expectations.
A market expert had tipped a price of about $150 million to $200 million, or $350 to $470 per sq ft (psf) of gross floor area, but the top bidder could not even manage half that.
Niche developer Hiap Hoe Group offered $73.3 million or $172 psf when the tender closed yesterday.
Garden City Hotel Holdings, owned by Mr Tew Boon Kui, lodged $125 psf, while Park Hotel’s unit Park Plaza would stump up only $82 psf.
Knight Frank’s director of research and consultancy Nicholas Mak, who had tipped bids of $350 to $470 psf at the end of March, said market conditions had changed.
Developers were cooling off largely because of the financial turmoil, a slowdown in the growth of visitor arrivals here and high construction costs, said Mr Mak.
Other experts felt that the 99-year leasehold site in front of the Sun Yat Sen Nanyang Memorial Hall was not that compelling.
Although Balestier Road has a bright mix of conserved shophouses and modern commercial and residential buildings, it also accommodates budget hotels, cheap and cheerful eateries and karaoke bars.
Another key reason for the low bids could have been the development demands placed on the 1.77ha site, the biggest hotel plot the Urban Redevelopment Authority (URA) has released since 2001.
The developer must build and manage a 0.46ha park in the middle of the plot as well as a public event space within the park.
Savills Singapore’s director of marketing and business development Ku Swee Yong said a developer’s returns would be hit by the need to build and manage the park.
Sixty per cent of the hotel site’s gross floor area must be used for a hotel, which could yield about 675 rooms. The rest of the space can be used for homes, shops and offices.
If Hiap Hoe, which submitted its bid through HH Properties, gets the site, it is expected to use it for hotel and commercial space. It will be Hiap Hoe’s first hotel project.
CBRE Research executive director Li Hiaw Ho did see a glimpse of silver lining in the three bargain-basement offers for the site.
‘It is heartening to see several bids submitted for the site in view of the fact that no bids were received for a hotel site in Race Course Road/Bukit Timah Road that closed in May,’ said Mr Li.
The URA will award the tender once the bids are evaluated.
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