A unique site, but will developers bite?

A host of factors to overcome first before parcel can be used

IT MAY boast a waterfront view overlooking the upcoming Sentosa integrated resort, but don’t expect much interest from developers for the latest hotel site at Bukit Chermin released by the Urban Redevelopment Authority (URA).

That’s the view shared by property analysts Today spoke to yesterday.

“Investor sentiment is very weak now, so it is unlikely that any developer would want to (pull the) trigger at this point in time,” said Colliers International director of research and advisory Tay Huey Ying.

Transaction volumes in the real estate market have been dismal in recent months, noted Cushman and Wakefield’s managing director, Mr Donald Han, who expects the trend to continue in the next few months.”

Situated along the Keppel Harbour coastline, the hilly, 3-hectare site sits between Keppel Club and the upcoming luxury residential development Reflections at Keppel Bay. The site is currently on the Government’s Reserve List, meaning it will be open for tender only if developers indicate a minimum bid price that is “acceptable to the Government”.

The URA released more details about the sale conditions for the site yesterday. “In addition to accommodation facilities, the proposed hotel development is planned to include offerings of lifestyle programmes and services that will cater to discerning international visitors,” the authority said.

Mr Han said another factor that might discourage developers would be the extra costs needed to develop the site, which is situated on a hill. Developers have to fork out more cash to “get traffic up the hill” and also to prepare retaining walls, which are needed to prevent the erosion of slopes, he said.

Analysts also point to declining tourist arrivals amid a deepening global economic downturn as another reason why property developers are not likely to bite. According to the latest Singapore Tourism Board statistics, visitor numbers fell for the fifth consecutive month in October. The decline of 8.1 per cent was the single biggest monthly drop since Feb 2005. Hotel revenue dropped for the first time in three years, while the average occupancy rate dropped about 7 percentage points to 82 per cent.

ERA Asia-Pacific’s assistant vice-president Eugene Lim thinks developers will show interest, although he feels the bids may be too “conservative” to trigger a tender.

“Developers definitely need to look long-term. If they succeed in getting the site and get it going, the integrated resorts would be up by the time, so they’ll be catching the upswing,” he said.

If triggered for tender, developers will then have to – unlike most other hotel sites – submit two separate proposals based on development concept and on price, with the concept aspect being evaluated first, the URA said.

Source : Today – 28 Nov 2008

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