Complete Property Market Updates of Singapore

May 1, 2008

Transitional office site gets top bid of $226 psf ppr

Filed under: 1 — Propertymarketupdates @ 3:12 am

Offer is 7% below last week’s top bid for nearby plot

THE Urban Redevelopment Authority (URA) has closed the tender for a transitional office site at Scotts Road/ Anthony Road – receiving a top bid of $32.99 million.

This works out to be $226 per square foot per plot ratio (psf ppr) for the 97,284.1 sq ft site which has maximum permissible gross floor area of 145,926.2 sq ft.

Four bids were received with the highest bid coming from Sun Venture Investments, a subsidiary of interior design and build firm DB&B Developments Pte Ltd. Its bid was 3 per cent higher than the next highest bid of $32 million from Scotts Development Pte Ltd.

DB&B chief executive Billy Siew Kim Leng said that if it is awarded the site, it intends to lease the building fully. Already, Mr Siew said that it is talking to two potential tenants who may lease the entire building.

While Mr Siew did not say who these might be, a check with the DB&B website reveals that its current clients include ABN Amro Bank and Korea Development Bank.

If awarded, this will be the first development project for DB&B. Still, Mr Siew said this is the normal progression in terms of ‘vertical integration’ for its business.

He also said he was bullish on the office sector and is setting its sights on a monthly rental of $9.50 psf.

Cushman and Wakefield managing director Donald Han agreed that the site could eventually attract big companies. ‘I think corporations would be favourable to an address like this.’

He also said that as long as the locations were good, there would still be developers interested in such sites. ‘The entry level is low so it would be good for new developers,’ he added.

The potential over-supply of new office space after 2010 is not likely to affect demand for this site either. Savills Singapore director (marketing and business development) Ku Swee Yong said: ‘The future supply is likely to be more spaced out than originally expected due to construction delays.’

Even so, Mr Ku estimates that rentals for transitional office space in the Scotts Road area is more likely to be around $7 psf a month.

While the DB&B’s bid is about 7 per cent lower than the top bid for the neighbouring transitional office site last week, Knight Frank director (research and consultancy) Nicholas Mak believes it is very likely that the government will award this site to DB&B, ‘taking into consideration that this average price of $226 psf ppr is slightly higher than the price paid for the first transition office site at Scotts Road last August’.

He added: ‘In an effort to ease the office space crunch, up to now, the government has awarded four transition office sites, which could yield about 650,000 sq ft of office space.’

Source : Business Times – 1 May 2008

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