URA releases reserve-list hotel site for application

Source : Business Times - 28 Nov 2008

Market watchers don’t see any takers until at least mid-’09

THE Urban Redevelopment Authority (URA) yesterday released for application through the reserve list a plum hotel site at Bukit Chermin flanked by Keppel Club and the Reflections at Keppel Bay condo project.

Despite the site’s attractive location in hilly terrain along the coast, some market watchers do not expect takers to emerge until mid-2009 at the earliest, given the grim property investment climate.

Any eventual bids for the 60-year-leasehold plot will be assessed under a dual-envelope system, taking into account concept and land price. The 3 ha plot is expected to yield about 50-70 hotel rooms/ villas.

The plot was initially on the second-half 2008 confirmed list but was moved to the reserve list late last month.

Jones Lang LaSalle Hotels executive vice-president Chee Hok said it is difficult to pin down the site’s value because of a combination of substantial construction costs expected for the project, the tight funding market and higher returns sought by potential investors given the current situation in the hotel business as operating profits trend down.

The site may be triggered for launch by investors towards second-half 2009, Ms Chee said. ‘At least business sentiment should be a lot clearer by then.’

Cushman & Wakefield Singapore’s managing director Donald Han also puts the earliest trigger date for the site at mid-2009. Hopefully by then, too, construction costs will have come down, which might also entice investors to apply for the site’s release, he said.

URA said: ‘The release of the site for a distinctive lifestyle hotel development will enhance the attractiveness of the Southern Waterfront and Southern Ridges.’

With panoramic views of Keppel Harbour, the plot, which has a maximum permissible gross floor area of 107,639 sq ft, is envisaged to be developed into a lifestyle hotel, URA said.

The site includes four pre-war black-and-white bungalows that are now leased for housing but will have to be restored and adapted for new uses by the successful tenderer. New buildings with panoramic views towards the harbour can be built, interspersed with the exiting bungalows, to create a unique development, URA said.

Developers interested in bidding for the site can make an application to URA accompanied by an undertaking to bid a minimum price. If this price is acceptable to the state, the plot will be launched for tender. Tenderers have to submit their concept proposals and bid prices in two separate envelopes. The concept proposals will first be evaluated against criteria including business and development concepts.

At the second stage, the price envelopes of proposals with acceptable concepts will be opened and the site will be awarded to the tenderer with the highest bid among those with acceptable concept proposals.