Only one bid received for transitional office site

Source: Business Times - 15 Oct 2008

THE tender for a transitional office site in Mohamed Sultan Road has closed with only one bid of $4.65 million, from RSP Architects Planners and Engineers.

Based on the 66,482 sq ft site and maximum permissible gross floor area (GFA) of 99,727.5 sq ft, the bid equates to a unit land price of $46.67 per sq ft per plot ratio (psf ppr).

Knight Frank director (research and consultancy) Nicholas Mak said this is the second-lowest bid received for such a site.

In January, a site at Aljunied was not awarded after the Urban Redevelopment Authority (URA) rejected the sole bid of $38.37 psf ppr.

Mr Mak said RSP’s bid reflects the ‘turbulence in the markets and the knowledge that there is a lot of supply coming up’. He doubts URA will award the Mohamed Sultan Road site as it might encourage opportunistic bidding, especially as the tender for another transitional office site is set to close next month.

Transitional office sites were introduced in 2007 as a stopgap measure to address an office space crunch.

RSP’s present office is in Scotts Road. It would likely build an office for its own use on the Mohamed Sultan site, though Mr Mak said that based on the permissible GFA, it would also be looking to lease out the remaining space.

The low bid comes as a surprise, especially as Mohamed Sultan is considered a central location.

Cushman & Wakefield managing director Donald Han said he expected bids to be at least half of those for two previous transitional office sites around Newton MRT, which were awarded at $242.50 and $226 psf ppr in April and May.

‘There is a chance the site will not be awarded as it would distort property prices,’ he said.

Perhaps more importantly, the market appears to have reached saturation point as far as demand for transitional office sites goes. ‘This will send a strong signal to URA,’ Mr Han said.