Rising construction costs could have made URA award to low bid, some say
THE Urban Redevelopment Authority has finally awarded a hotel plot at Balestier and Ah Hood roads opposite Sun Yat Sen Nanyang Memorial Hall - 22 days after the tender closed.
The winning bid from HH Properties, a joint-venture between Hiap Hoe and sister company SuperBowl Holdings, was $73.3 million or $172.09 per square foot per plot ratio - significantly below the $350-470 psf ppr that analysts indicated for the site when it was launched in late March.
Heritage area: URA said the project will have a strong link with the Sun Yat Sen Nanyang Memorial HallThis created uncertainty as to whether URA would award the site. Contacted by BT, a URA spokeswoman would not say whether the top bid was below the Chief Valuer's reserve price.
'We are unable to disclose CV's reserve price, which is confidential,' she said. 'However, the Government has assessed that the highest bid is acceptable and has thus awarded the site. We are unable to comment on the details of the evaluation, as they are confidential.'
The tender, which closed on July 16, attracted three bids. Some market watchers suggest that in awarding the site, the authorities may have taken into account how rising construction costs are denting bids.
An industry observer suggested that when a top bid is below the state's reserve price, the chances of a plot being awarded may improve if there are at least three bids.
The award of the Balestier site may also have been motivated by its strategic importance as a catalyst to URA's plans to rejuvenate the area. URA said yesterday that the project on the site will be a 'landmark development that will establish a strong connection with the heritage Sun Yat Sen Nanyang Memorial Hall'.
The Hiap Hoe-Superbowl joint venture will make an all-in investment, including land cost, of about $200-220 million, Teo Ho Beng, managing director of both Hiap Hoe and SuperBowl told BT.
The two listed companies are part of Hiap Hoe Holdings group, which is also involved in the construction business. The group will handle the main contract for the Balestier project.
Mr Teo said that the project marks Hiap Hoe group's first venture into the hotel business, which it hopes will be a new core segment.
The project, slated for completion in about three years, will include two towers.
A hotel with about 500-600 rooms will be in a 25-storey tower, which will also have a four-storey podium with function rooms, restaurants and shops.
The other tower is likely to be 15 storeys and will have offices and small-office, home-office (Soho) units.
'The intention is to strata title and sell the office and Soho units to part finance the development,' Mr Teo said.
The three-star hotel will cater to businessmen and tourists, especially from China and India.
'We will appoint a hotel management company to operate the hotel,' he said.
URA said that Balestier, with its strong heritage value and old world charm, has been designated as one of Singapore's identity nodes since 2002.
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