Complete Property Market Updates of Singapore

April 23, 2008

Sprawling hotel site in Balestier put up for sale

Filed under: General — Propertymarketupdates @ 3:31 am

Among the restrictions: Developer must build a park in the middle of the 1.77ha plot

IT IS hardly one of Singapore’s must-see tourist destinations, but Balestier Road is getting the sort of boost that might make it more visitor-friendly.

The Government yesterday released a sprawling hotel site for sale between Balestier Road and Ah Hood Road, in front of the Sun Yat Sen Nanyang Memorial Hall.

And there is an unprecedented twist: The developer must build and manage a park that takes up a quarter of the land right in the middle of the site.

It has even been named – Zhongshan Park – and its use has also been decided, with the Urban Redevelopment Authority (URA) stating that it wants it to, among other things, ‘enhance the experience for…visitors to the memorial hall’, which draws about 50,000 tourists a year.

Other restrictions, such as a required public event space and outdoor food and beverage or retail outlets in the park, also apply.

The URA said yesterday that the land release provides a ‘great opportunity to develop a unique hotel development’ in an area rich with heritage.

While Balestier is better known for famous eateries and lighting shops, it is also lined with shophouses, many of which have been earmarked for conservation and are a niche tourist attraction.

But the site’s large size and many restrictions mean that there are likely to be few bidders in the public tender, said property experts.

Mr Nicholas Mak, the director of research and consultancy at Knight Frank, expects fewer than five offers, with bids coming in at $150 million to $200 million, pricing it at $350 per sq ft (psf) to $470 psf per plot ratio.

The 1.77ha plot is the biggest hotel site released by the URA since 2001 and is a tad smaller than the Orchard Turn parcel, where the Ion Orchard mall and The Orchard Residences condominium are being built.

Sixty per cent of the site’s total gross floor area of 430,556 sq ft must be used for a hotel, which would yield about 675 rooms – slightly more than the 663 rooms at the Grand Hyatt Singapore in Scotts Road.

The rest of the land can be used for homes, shops, offices or more hotel rooms.

Even the hotel’s design, envisioned as contemporary Chinese, must be approved by a URA advisory panel.

The agency had previously offered a smaller version of the site for sale, without the park. But that plot – half the size of the present one – lingered on the market for a year without any takers before the URA took it off in October last year to combine it with other vacant land nearby.

It is now on the URA’s confirmed list, so it is up for sale regardless of demand.

Consultants noted the challenges inherent in the site.

Bidders will need a strong design concept and a strategy to make the park generate income, said Mr Mak.

He added that the site is not near an MRT station and is in fact ‘on the outskirts of everything’.

But some developers may still be attracted ‘because the challenges may reduce the number of competitors’, Mr Mak said.

‘This site could attract niche developers who are experienced in developing hotels with strong themes.’

Another bright spot is the strong sentiment in the hotel sector, especially for the mid-tier segment, said Ms Tay Huey Ying, director of research and consultancy at Colliers International.

‘The market is quite short of mid-tier hotels, so the prospect is good,’ she said.

The hotels dotting Balestier Road are mainly budget stays, including multiple outlets of Fragrance Hotel and Hotel 81.
 
Source : Straits Times – 1 Apr 2008

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