11 Bids For Scotts Rd Transitional Office Site

Source : TODAY, Thursday , August 23, 2007

THE Government’s first transitional office site at Scotts Road has attracted a strong response from 11 bidders — with a top bid of $37 million — as its tender draws to a close yesterday.

The 15-year leasehold site, which is located next to Newton MRT Station, was the first site released by the Government to help ease the severe shortage of office space.

Buildings can go up to four stories in height for this site, which has a gross floor area of 15,666 sq m.

The top bid for the 1.04ha plot of land came from Scotts Spazio, which submitted a tender of $37 million — or $2,361.81psm. This is more than three times the lowest bid, which was $10.2 million.

Analysts had expected just “four to eight bids” initially.

“This reflects that there is still a strong sense of confidence in the market among office property players, despite the stock market turbulence,” said Knight Frank director of research and consultancy Nicholas Mak.

The original lease of 10 years was extended by another five last month, after the Urban Redevelopment Authority said that interested investors wanted a longer lease period to enable them to recoup their investments and cater to tenants’ needs.

“Developers seemed undaunted by the short tenure of only 15 years for this parcel. The strong showing and level of bids submitted reflects developers’ general optimism in light of the current tight supply of offices in prime locations,” said CBRE executive director of consultancy Li Hiaw Ho.

The popularity of this parcel could be attributed to its regular and sizable plot as well as its proximity to amenities such as food centres, shopping facilities and the MRT, he added.

Based on the highest bid submitted, the breakeven costs for the site is “likely to be around $500psf per plot ratio, this would provide the successful bidder with a decent yield of around 12 per cent for the 15-year leasehold site, based on a gross rent of about $6.50psf per month,” Mr Li said