Few bids for Mohd Sultan site?

Aug 20, 2008
Few bids for Mohd Sultan site?
By Joyce Teo, Property Correspondent

RESPONSE is likely to be tepid for a tender for a transitional office
site in Mohamed Sultan Road, given the large supply of space coming
onstream in 2010.

The 0.62 ha site has a maximum gross floor area of 9,265 sq m and is
being sold on a short-term lease of 15 years with a price tipped at
anything from $10 million to $18 million. A block of about four
storeys could be built in around a year, said the Urban Redevelopment
Authority (URA) yesterday.

But Mr Nicholas Mak, Knight Frank's director of consultancy and
research, said the development period for such projects could take up
to two years.

This would mean the development will be completed in 2010, just when
a large supply of about four million sq ft of office space will be
ready. 'This would result in a significant amount of competition in
the office property market,' said Mr Mak.

He thinks the uncertainty will mean a cautious approach by developers
with fewer than five bids likely, including the opportunistic ones.
Mr Mak said the land price for the site is expected to come to
between $10 million and $13 million, or from $100 to $130 per sq ft
(psf) of potential gross floor area. Office rents in the Mohamed
Sultan area are now going at $5 psf to $7 psf.

Mr Donald Han, managing director of Cushman & Wakefield here, is
tipping higher bids of $150 psf to $180 psf. He believes there will
be interest in the site as it is just outside the Central Business
District.

The land is one of three commercial plots slated for sale through the
confirmed list in the second half of the year. Confirmed list sites
go up for tender at scheduled dates, regardless of developer
interest.

When the availability of this and another transitional site was
announced in June, some market watchers questioned the need for them.

Colliers International's director of research and consultancy, Ms Tay
Huey Ying, said at the time that the market was already seeing
dwindling interest in such transitional sites in the wake of subdued
sentiment in the economy and property market.

The URA also launched tenders for two industrial sites on the reserve
list yesterday. This came after developers applied for the 60-year
leasehold sites. The firm that is keen on a Kallang Pudding Road site
committed to bid at $10.8 million or above while the party eyeing the
Ubi Avenue 4 site will bid $21.6 million or more.