URA gets $51m bid for hotel site

Source : Business Times - 2 Aug 2008

At Kallang and Jellicoe roads, the 45,451 sq ft site costs $249.6 psf ppr

The Urban Redevelopment Authority (URA) has received a committed bid of $51 million for a hotel site at Kallang and Jellicoe roads.

This works out to $249.6 per sq ft per plot ratio (psf ppr) for the 45,451 sq ft site, which is on the reserve list of the Government Land Sales programme.

The site, which has a maximum permissible gross floor area of 204,363 sq ft, will now be put up for public tender.

Knight Frank director (research and consultancy) Nicholas Mak believes that barring any major shocks to the economy, the tender could attract bids in the range of $400-$450 psf ppr.

‘This is a relatively good site only two MRT stations from Raffles City and close to the future Kallang Riverside,’ he said.

But poor market sentiment or lower-than-expected visitor arrivals in the coming months could result in lesser bids of $330-$400 psf ppr.

While public tenders always draw bids higher than the trigger price, one property consultant said that he is surprised the site at Kallang and Jellicoe roads was even triggered, given the state of the global economy and rising construction costs.

‘Investors will have to now factor a much longer period for their return on investment,’ he noted.

The public tender for the site follows poor response to hotel development sites in Balestier Road and Race Course Road, with the former attracting a top bid of $172 psf ppr and the latter drawing no bid at all. URA has said that the government is evaluating the tendered bids for the Balestier Road site, the tender for which closed on July 16.

In this light, Mr Mak said that the trigger price for site at Kallang and Jellicoe roads, which can be compared to the government’s reserve price, seems ‘realistic’.

URA projects that a 455-room hotel can be built, which Mr Mak reckons would be positioned as a business-class establishment.

Including the site at Kallang and Jellicoe roads, there are 10 hotel development sites on the GLS reserve list.

According to URA, the reserve list for second-half of 2008 provides for total potential supply of 5,050 hotel rooms, including a white site at Outram Road.

There is one site on the GLS confirmed list, and including a commercial site at North Bridge Road, the confirmed list could potentially yield 700 hotel rooms.