Record $72 PSF PPR Bid For A 30-Year Leasehold Industrial Site

Source : The Business Times, 24 Aug 2007

AN URBAN Redevelopment Authority tender at Kaki Bukit Road 3 yesterday drew seven bids, with a top offer of $72 per square foot (psf) of potential gross floor area - the highest-ever unit land price for a 30-year leasehold industrial site, according to CB Richard Ellis.

And this top bid, made by Eastpoint Development Pte Ltd, was a whopping 58 per cent more than the second-highest bid of $46 psf per plot ratio (ppr), which came from EL Development, a unit of Evan Lim & Co.

The top bid at yesterday’s tender worked out to nearly $5.7 million in absolute terms and the bidder, Eastpoint Development, is controlled by Lim Kim Hong and Lim Huixing.

The Lims also took part in Wednesday’s tender for the maiden transitional office site next to Newton MRT Station, bidding under MV Land Pte Ltd, which entered the fourth-highest bid at that tender.

The Kaki Bukit site is zoned for Business 1 use, which means it can be developed for a range of clean and light industrial, and warehouse use.

Colliers International director (industrial) Tan Boon Leong reckons the 131,917-sq-ft plot, which has a plot ratio of just 0.6 and a triangular shape with a narrow pointed tip at one end, is optimally suited for development into single-storey (with mezzanine floor) terrace factories or two/three-storey terrace factories. ‘The plot can be built into about 23 single-storey (with mezzanine floor) units with an average saleable area of 3,500 sq ft per unit,’ he added.

‘The break-even cost to the developer could be around $150-$180 psf of saleable area and it could sell the units for about $220-230 psf. It should be able to command a premium for such factories, despite the 30-year leasehold tenure, because there’s a dearth right now for single-storey terrace factories in the Paya Lebar, MacPherson and Kaki Bukit areas,’ Mr Tan added.

CB Richard Ellis executive director Li Hiaw Ho said the Kaki Bukit site can be developed into a high-tech industrial building.

Yesterday’s tender also drew bids from KNG Development, Sin Hong Hwa Pte Ltd, Union Contractors (Singapore), Eng Seng Lee Construction Co and Soilbuild Group. Soilbuild was the lowest bidder at $2.44 million or $31 psf ppr. It was also the lowest tenderer at Wednesday’s tender for the 15-year leasehold transitional office site next to Newton MRT Station.

CBRE’s Mr Li noted that the high number of bids received as well as the robust prices for the industrial site indicate continued strong demand among developers and manufacturers.

‘It is not surprising as occupancy rates for industrial space are still on an upward trend. Industrial rents are also on a healthy growth path, driven by a buoyant manufacturing sector,’ he added.