Holland Village site up for sale next month

A mixed development site at Holland Village will be put up for sale next month. Usually, tenders are awarded to the highest bidder. But for this site, authorities are exploring various sales mechanisms.

They could include asking developers to submit their plans for the site before accepting their bids. The Urban Redevelopment Authority (URA) said details such as the method of sale are still being firmed up.

URA also said that for “strategic sites”, it holds industry consultations before putting the parcels up for sale. This is to understand how the market may respond to different sales mechanisms.

Touted as Singapore’s bohemian enclave, Holland Village is best known for its characteristic two-storey shophouses. But there are concerns that this estate may not retain its charm, with the additions of new developments.

The 2.3-hectare commercial and residential site to be put up for sale next month is part of the Holland Village Extension plan as unveiled in the Master Plan 2014.

Property watchers said authorities can take the unconventional way of selling the site to preserve the character of Holland Village – through the two-envelope tender system.

The government typically sells land through the competitive price-only method in which the highest bidder wins. But for certain sites, developers are assessed on more than just what they can afford to pay for the land.

Hence, for instance, under the two-envelope tender system or the Concept and Price Revenue tender system, developers can be required to submit concept plans for the land parcel they bid for.

Under this system, the proposals are evaluated using criteria like quality of architecture, business concepts and track record of the developers. Only those developers with proposals that satisfy the evaluation criteria will be short-listed. The site is then awarded to the highest bidder.

SLP International Property Consultants executive director of research and consultancy, Nicholas Mak, said: “The so-called two-envelope system is typically used in situations where the government either wishes to preserve a certain characteristic of that development site, or there are already some existing architecture or buildings on that site the government wishes to conserve.”

“That way, equity muscle will not be the sole determinant for the award of the (Holland Road) site,” said Desmond Sim, head of CBRE Research, Southeast Asia.

“Through the double-envelope concept, concerns from the public, such as the final intended use of the space and the design of the building, for this prominent site can be safeguarded,” he added.

Property firm Century 21 Singapore’s CEO Ku Swee Yong said: “This site is a very big one and it can alter the social make-up of the neighbourhood. If the normal price tender system was to take place and the developer who won it build it into, say the Chinatown or Little India concept, in that case we could have the social make-up of the whole Holland Village changed.”

The two-envelope system was introduced in 2005, and four government land sale sites have been sold through the system since. They include the historic Capitol site at Stamford Road/North Bridge Road and the Collyer Quay site where Fullerton Hotel sits.

Observers added that the procedure can be used to weed out certain developers from winning the bid. Mr Ku said: “If URA merely lets this site out for a normal price tender bid, I think there may be winning developers who would just build something that is run-of-the-mill, strata-title all the units, including the retail ones, and sell off everything at the best possible profit.

“In that case, there may not be a lot of consideration for keeping the character and some of the heritage of the neighbourhood that is called Holland Village. So, in order to make sure that this is not just another plain vanilla cookie-cutter type of building, we should have concept plans being drawn out.”

But observers also pointed to the downside of having such a system such as the higher costs developers pay for the site due to the money spent on hiring architects and coming up with the business concepts.

“One thing is this two-envelope can be very costly for the bidders because they would need to employ architects and engineers to draw up the concepts. There is a long preparation time,” Mr Mak said.

Some analysts said this may potentially drive up land prices, which can result in higher home prices or higher rents for retailers.

Source : Channel NewsAsia – 30 Nov 2014

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