Converting Hotels Into Condos Just Got Harder

Source : The Business Times, January 15, 2008

Rules to ensure that sites zoned as hotels are not switched to other uses

Redevelopment plans involving the likes of Four Seasons Hotel along Orchard Boulevard and Negara on Claymore may have to go back to the drawing board after the government tightened hotel conversion rules yesterday. If the owners of these properties had visions of converting them to other uses - including residential - they may have to think again.

The tightened rules will put a dampener over possible conversion plans. At the same time they will ensure that there is sufficient supply of hotel rooms in key tourist districts like Orchard Road, amidst the tourism boom.

As a general rule, hotels located on sites zoned for hotel use under the Master Plan will not be allowed to convert to other uses. The same goes for hotels that are located within zones for other uses but where there is a specific planning or sales requirement for a minimum hotel quantum to be provided, Urban Redevelopment Authority and Singapore Tourism Board said in a joint release yesterday evening.

'The revised approach to evaluating hotel conversion applications will ensure that the location and number of hotel rooms safeguarded are in line with planning intentions and strategic planning objectives,' the two government bodies said.

This supersedes a policy revision announced in 2002 when 19 hotels which had been previously safeguarded for hotel use under an earlier 1997 ruling were removed from the safeguard list. This meant that their owners could apply to convert the properties to other uses.

However, owners of 18 of these 19 hotels will now not be allowed to convert their sites to other uses such as residential, since these sites are zoned for hotel use under the current Master Plan 2003.

Apart from Four Seasons and Negara on Claymore, the affected hotels include York Hotel along Mount Elizabeth, Hotel Grand Central, Hotel Supreme and Holiday Inn Parkview - all in the Kramat/Cavenagh roads vicinity.

These are all prime district locations and their owners could have had aspirations to convert them to other uses, especially residential, to optimise their land values.

Hotel Properties Ltd has long-standing plans to redevelop Four Seasons Hotel, along with its other three neighbouring properties - Hilton Hotel, Forum and HPL House - into a mega project along Orchard Road.

In 2006, UOL Group gained control of Hotel Negara Ltd, eyeing its key asset, the hotel that it has since renamed Negara on Claymore.

Market watchers had expected UOL to redevelop the property into a residential project or a small office, home office (Soho) development in the longer term.

The list of 19 hotels removed from the hotel safeguard list in 2002 and which are zoned for hotel use under Master Plan 2003 also include a string of hotels in the Bencoolen/ Waterloo/Victoria streets area such as Allson, City Bayview and Strand hotels.

Yesterday's changes also affect non-hotel developments currently on sites that are zoned for hotel use: these properties will only be allowed to be redeveloped into hotel uses, in line with the Master Plan intention.

URA said it will take a case-by-case approach to any applications for exceptions to these latest rules, factoring in the land use and planning intention for the area, as well as ensuring sufficient supply of hotel rooms to meet Singapore's tourism needs.

Elaborating on the rationale for the changes, a URA spokeswoman pointed to record visitor arrivals and tourism receipts as well as high hotel occupancies and revenues. Demand is high for hotels, especially in the key tourist belts like Orchard Road and Singapore River.

However, these areas are already largely built up, leaving limited state land that can be made available for new hotel developments.

'Hence, the loss of hotels within the key tourist districts is irreversible and even the conversion of just a few of the existing hotels would significantly impact the critical mass of hotel rooms within these areas,' the URA spokeswoman added.

The presence of hotels in major tourist areas contributes to the mix of uses that is critical to the vibrancy and character of these areas as Singapore shapes up as a global city, she added.

With a decision on whether a hotel site can be converted to other uses now based on the plot's Master Plan zoning, 'the change puts the land use regulatory framework for hotels in line with other uses', URA said.