Bids For Transitional Office Site Fall Short Of Expectations

Source : The Business Times,January 10, 2008

THE Urban Redevelopment Authority (URA) has named the bidders for a 15-year leasehold transitional office site at Mountbatten Road. The top bid came in at $14.9 million or $69.17 per square foot per plot ratio (psf ppr) - 14 per cent less than the last site awarded, in Tampines.

Of the three bids received, the top price was offered by Mezzo Properties Pte Ltd. The bidder is understood to be associated with MV Land, which was awarded an industrial site at Sin Ming Lane in a public tender with a bid of $68.9 million or about $50 psf ppr in October 2007.

Superbowl Land put in the second highest bid of $14.8 million (or $68.70 psf ppr) while Soilbuild Group bid $10.93 million (or $50.77 psf ppr).

The URA said that the decision on the award of the tender will be made after the bids have been evaluated.

While the top bid falls short of market expectations, Cushman & Wakefield managing director Donald Han believed that the URA is likely to award the site as transitional offices have a mandate as a 'quick fix' to address the critical office supply crunch.

Based on recent tenders, prices for transitional office sites appear to be falling.

In November 2007, a tender for a transitional office site in Tampines drew just one bid of $10 million, which works out to $80.65 psf ppr, lower than the $100 psf ppr region that most property consultants had estimated.

The Mountbatten site being closer to the city and opposite the future sports hub, Mr Han had expected bids to be around $140 psf ppr. He said that based on the top bid, the potential developer of the Mountbatten site could stand to reap double digit yields if the space can be leased at $4-5 psf per month.