Mohamed Sultan office site draws aggressive bids

THE Urban Redevelopment Authority (URA) yesterday received surprisingly high bids for a transitional office site at Mohamed Sultan Road.

The 15-year leasehold plot attracted three bids. The highest was $17.19 million, or $172 per sq ft per plot ratio (psf ppr), from a boutique property developer and sports fashion retailer Link (THM) Holdings Pte Ltd.

Yesterday’s top bid was eye-catching on several counts. First, it was 3.7 times that of the sole bid which URA received in 2008 when it last tried to sell the site. That bid, at just $4.65 million, was rejected.

Second, it far exceeded the trigger price for the site. URA put the site up for tender again in February after a developer committed to pay at least $9.33 million for the land.

The other two bids which came in yesterday were also higher than the trigger price. OKH Management Pte Ltd, a unit of building contractor OKH Holdings Pte Ltd, offered to pay $13.29 million, or $133 psf ppr.

The third bid, at $11.16 million or $112 psf ppr, came from Agrow Investments Pte Ltd.

The results of yesterday’s tender ‘exceeded expectations’ and reflects confidence about the office market, said Savills Singapore commercial leasing director Agnes Tay.

The office site spans 66,482 sq ft and has a maximum gross floor area of 99,728 sq ft. Ms Tay estimated that with construction costs, total investment in the site could come up to around $32.2 million.

This would translate to a breakeven rental of around $2.50-$3.00 psf over 14 years – the amount of lease remaining when the site is ready in about a year’s time. This would be ‘appealing to many office users, especially big organisations who appreciate less volatility in rents over time’, she said.

Cushman & Wakefield Singapore managing director Donald Han also described the bids for the site as ‘aggressive’. The top bidder is perhaps confident of controlling construction costs, he said.

According to Link (THM)’s website, the company has developed a number of landed homes in Districts 9, 10 and 11. Its latest launches include a good class bungalow at Astrid Hill and semi-detached houses at Holland Road.

Link (THM) also distributes bags by brands such as Nike and Adidas. It has shops in VivoCity, Jurong Point and other malls.

Mr Han added that by the middle of next year, when the office space is completed, rents in the market would probably have picked up.

Source : Business Times – 19 Mar 2010