Katong Mall On Sale For Up To $250m - Amid Controversy

Source : The Straits Times, May 27, 2008

Public tender comes after a contentious collective sale approval last year

ONE of the landmarks of the east, Katong Mall, was put up for sale yesterday at an indicative price of $220 million to $250 million - amid some controversy.

The 99-year leasehold property comprises strata-titled commercial units used as shops and other businesses.

But the site can be rebuilt into a mixed development comprising residential and commercial units, said its marketing agent Jones Lang LaSalle (JLL).

Its public tender comes after a contentious collective sale approval process in September last year.

About 35 minority owners claimed they were not consulted in the drawing up of the sale agreement, and that the sale process was conducted under the old rules and not the new, stricter ones that took effect in October.

They also complained of a low reserve price, and said some majority owners had a potential conflict of interest as they were property developers - Nustavino and Habitat Properties - that could bid for the property.

Whether the consent of owners representing 80 per cent of the share value required for the sale had been obtained was also called into question yesterday.

One minority owner, Mr Robert Ong, told The Straits Times that five owners had withdrawn their signatures before the new laws kicked in on Oct 4.

'This means the signatures collected could have fallen below the 80 per cent threshold,' he said.

When contacted, JLL's local director for investments, Ms Stella Hoh, said that the firm had the 80 per cent level to proceed with the sale.

On the conflict of interest issue, she said that even if the sale committee members were developers by trade, they were legally allowed to bid as long as they declared their position.

They would not take part in the tender decision-making and voting process, she added.

'We believe this site will attract a lot of parties despite the current market, given that there are few private land sites for sale in this area.'

The four-storey mall has a land area of 78,158 sq ft with a gross plot ratio of 3.6. This works out to a gross floor area of 281,369 sq ft - an indicative sale price of $782 per sq ft (psf) to $888 psf per plot ratio.

Developers have an extra option: JLL said it has also obtained outline planning permission for a mixed development with an approved plot ratio of three - a gross floor area of up to 234,474 sq ft. This is subject to the relevant authorities' approval and payment of a development charge.

Located at the junction of East Coast Road and Joo Chiat Road, the project could yield about 490 commercial units of 400 sq ft each, or 100 residential homes and 185 commercial units of 1,200 sq ft and 400 sq ft, respectively.

Savills Singapore director (business development) Ku Swee Yong said the site was an attractive location, with an increasing population catchment with upcoming condominiums nearby.

'But given the current market, it remains to be seen whether there will be takers.'

Meanwhile, all eyes will be on the results of the public tender, which closes at 3pm on June 25.