Chinese developer said to have triggered Central Blvd site

A developer from mainland China is likely to have triggered the plum Central Boulevard site from the government’s reserve list, The Business Times understands.

Urban Redevelopment Authority (URA), which announced on Friday that the site had been triggered for launch, did not name the party that successfully applied for the site’s release.

The applicant has undertaken to bid at least S$1.536 billion – which works out to S$1,010 per square foot per plot ratio (psf ppr) for the white site – which has to be developed into a predominantly office project.

The 1.1-hectare white site is next to Asia Square Tower 1, which was sold recently for S$3.38 billion. That deal has raised Singapore’s profile again as a property investment destination to big international investors, say market watchers.

Industry players told BT that big property groups from overseas and Singapore have been studying the site with increasing intensity in recent months. However, local players eschewed making an application to URA for the site’s release as they believe successful applicants of reserve-list sites typically suffer a “curse” of not clinching the site at tender. Instead they waited for a foreign developer to trigger the site – and a mainland China player finally obliged. However, sources declined to identify the party that did the honours.

CBRE executive director of investment properties, Jeremy Lake, said: “A lot of people have been chatting in the market for the past six or seven months on the Central Boulevard site. Sentiment in the Singapore office market has improved because of a few large investment sales transactions as well as more progress on the office leasing front.”

Property consultants generally expect five to eight bids for the site. URA said it will announce the launch of the public tender for the site later this month. The tender period will be about 10 weeks.

Colliers International managing director of capital markets and investment services for Asia, Terence Tang, said: “We are looking at five bids – from local consortiums as well as major regional developers, including those from Hong Kong and mainland China. “To these big players taking a project of this size, with a potential gross development value of say S$3.5 billion or more – is no big deal.”

Mr Tang expects the bids to centre around S$1,100 psf ppr, with the highest likely to touch S$1,200 psf ppr – that would translate to a breakeven cost of around S$2,250 psf. “Given that Asia Square Tower 1 was transacted at S$2,700-plus psf on net lettable area, this leaves a decent margin for the developer.”

CBRE’s Mr Lake predicts the top bid will be higher – easily S$1.9-2 billion, working out to S$1,250-1,315 psf ppr.

“The winning bidder may be driven by the desire to make a statement by building a trophy commercial development on a landmark island site in the Marina Bay CBD – and not motivated purely by financial returns,” said Mr Lake.

The site boasts prominent frontages along both Central Boulevard, one of the two main roads within the area connecting to the Central Business District (CBD), and Raffles Quay. The 99-year leasehold site can be built up to 50 storeys, with a maximum gross floor area (GFA) of 141,294 sq m (1.52 million sq ft), of which at least 100,000 sq m or 70.77 per cent must be put to office use. In addition, up to 5,000 sq m GFA can be set aside for retail use.

The development is to include a child care centre facility with a minimum GFA of 500 sq m. The balance may be utilised for additional office, commercial school, hotel, serviced apartment or residential uses. The entire development – excluding the GFA for hotel, serviced apartment and residential use – can have no more than three strata lots.

Most consultants expect the winning bidder to develop an office, retail and residential project – with the presales of apartments generating cashflow that could help to partially fund construction costs.

JLL’s head of Singapore research Tay Huey Ying said that the future development on the site can be completed in 2020/2021 to meet the “expected tight supply of prime CBD office space then”. However, Cushman & Wakefield’s research director Christine Li highlighted that the redevelopment of CPF Building at 79 Robinson Road which is expected to be completed in 2020 and other potential redevelopments of older office buildings could pose some competition.

Ms Li also highlighted a restriction stipulated for the Central Boulevard site that the car parking provision of the development is to be capped at 80 per cent of the prevailing minimum car parking standard. “This could make the development less attractive to office tenants who expect generous car parking allocation.”

However, other observers say the tighter car parking provision is to be expected given the drive towards a car-lite, green CBD.

Moreover, the project will be directly and seamlessly connected to the adjacent Downtown MRT Station in addition to being linked to Raffles Place Interchange MRT station and the future Shenton Way MRT station (Thomson-East Coast Line), providing all-weather connections to the public transport nodes.

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