Reserve Site Up For Sale, Sparked By $7.8m Bid

Source : The Business Times, October 24, 2007

Committed sum for 17conservation shophouses comes to just $460K each.

With property prices hitting new peaks in recent times, it is rare to see a committed bid of just $7.8 million for a 15,200 sq ft site near the city centre.

Based on the committed bid received by the Urban Redevelopment Authority (URA), each of the 17 two-storey shophouses on this Jalan Sultan site could, theoretically, go for as little as $460,000 a unit.

The committed bid is not the transacted price for the reserve list site as it will now be put up for public tender. Still, it gives an indication of the range of bids that could eventually come in.

The 17 shophouses have been gazetted for conservation and the successful tenderer is required to restore and reconstruct these conservation shophouses in accordance with the tender conditions and the Urban Redevelopment Authority’s Conservation Guidelines for Historic District.

Zoned for commercial use, the shophouses could be used for office or even as hotels.

Colliers International executive director (investment sales) Ho Eng Joo believes the winning bid could be around $14 million or roughly $800,000 a unit. Add to this renovation and restoration costs of about $300,000 per unit and the potential winning bidder could be looking at spending about $1.1 million per unit.

But as Mr Ho notes: ‘The area is changing.’ Highlighting that KeyPoint, formerly known as Jalan Sultan Centre, was sold recently for $1,186 psf of net lettable area, Mr Ho believes the 17 shophouses could give an investor a yield of over 5 per cent if each unit is rented out for at least $5,000 a month.

‘Only the lack of carparking could be an issue,’ he added.

Over in Woodlands, the Singapore Land Authority has released a 172,223 sq ft residential development site at Woodlands Avenue 2/Rosewood Drive and developers could also be looking at a bargain.

Mr Ho reckons the site, which is on the confirmed list of the Government Land Sales programme, could go for between $250 - $280 psf ppr. With a plot ratio of 1.4, the gross floor area could be up to 241,112 sq ft, giving the site a price tag of between $60.2 million and $67.5 million.

The site may not be directly next to an MRT station but Mr Ho believes a future development would have good rental potential as it is close to the Singapore American School.