Hiap Hoe JV gets Balestier hotel plot for $73.3m

August 8, 2008
Hiap Hoe JV gets Balestier hotel plot for $73.3m
Rising construction costs could have made URA award to low bid, some
say
By KALPANA RASHIWALA

THE Urban Redevelopment Authority has finally awarded a hotel plot at
Balestier and Ah Hood roads opposite Sun Yat Sen Nanyang Memorial
Hall - 22 days after the tender closed.

The winning bid from HH Properties, a joint-venture between Hiap Hoe
and sister company SuperBowl Holdings, was $73.3 million or $172.09
per square foot per plot ratio - significantly below the $350-470 psf
ppr that analysts indicated for the site when it was launched in late
March.

This created uncertainty as to whether URA would award the site.
Contacted by BT, a URA spokeswoman would not say whether the top bid
was below the Chief Valuer's reserve price.

'We are unable to disclose CV's reserve price, which is
confidential,' she said. 'However, the Government has assessed that
the highest bid is acceptable and has thus awarded the site. We are
unable to comment on the details of the evaluation, as they are
confidential.'

The tender, which closed on July 16, attracted three bids. Some
market watchers suggest that in awarding the site, the authorities
may have taken into account how rising construction costs are denting
bids.

An industry observer suggested that when a top bid is below the
state's reserve price, the chances of a plot being awarded may
improve if there are at least three bids.

The award of the Balestier site may also have been motivated by its
strategic importance as a catalyst to URA's plans to rejuvenate the
area. URA said yesterday that the project on the site will be
a 'landmark development that will establish a strong connection with
the heritage Sun Yat Sen Nanyang Memorial Hall'.

The Hiap Hoe-Superbowl joint venture will make an all-in investment,
including land cost, of about $200-220 million, Teo Ho Beng, managing
director of both Hiap Hoe and SuperBowl told BT.

The two listed companies are part of Hiap Hoe Holdings group, which
is also involved in the construction business. The group will handle
the main contract for the Balestier project.

Mr Teo said that the project marks Hiap Hoe group's first venture
into the hotel business, which it hopes will be a new core segment.

The project, slated for completion in about three years, will include
two towers.

A hotel with about 500-600 rooms will be in a 25-storey tower, which
will also have a four-storey podium with function rooms, restaurants
and shops.

The other tower is likely to be 15 storeys and will have offices and
small-office, home-office (Soho) units.

'The intention is to strata title and sell the office and Soho units
to part finance the development,' Mr Teo said.

The three-star hotel will cater to businessmen and tourists,
especially from China and India.

'We will appoint a hotel management company to operate the hotel,' he
said.

URA said that Balestier, with its strong heritage value and old world
charm, has been designated as one of Singapore's identity nodes since
2002.