URA To Up Lease Period Of Scotts Rd Site

Source : The Business Times, July 27, 2007

THE lease period for the Urban Redevelopment Authority's (URA) first transitional office site, at Scotts Road, is to be increased from the proposed 10 years to 15, the authority said yesterday.

The extension is being made in response to market feedback that most investors prefer a longer lease to recoup their investments and to meet the needs of prospective tenants.

In view of the change, the closing date for the tender has been extended by three weeks to Aug22, to give more time for interested investors to reconsider their bids, the URA said.

Industry players generally welcomed the news. 'At 10 years, it could not work out for investors; they're likely to end with a loss from the venture. At 15 years, it can be a marginally profitable venture,' said an industry observer.

CB Richard Ellis (CBRE) executive director Li Hiaw Ho said: 'It's probably workable at 15 years. We've heard of potential tenants who are interested, and are looking for a developer to build a transitional office building on the site and lease the whole building to them.

'They reckon rents should be lower than in the CBD or Orchard Road and the location is convenient, right next to Newton MRT station.'

CBRE estimates the maiden transitional plot should generate about 140,000 sq ft net lettable area of offices.

URA has previously said it expects a low-rise development of three to four storeys which can be built quickly in about a year.

'The site is likely to be awarded for about $100-$150 per square foot per plot ratio,' Mr Li estimated.