Tuesday, October 14, 2008

Hotel 81 Developer To Start New Brand At Kallang Road Site

Source : The Business Times, October 14, 2008

HOTEL 81-linked Citywide Land has been awarded a hotel site at Kallang/Jellicoe roads and has a new brand in the works.

Caroline Choo, a director at Citywide Land and Hotel 81 Management said: 'We will be creating a new hotel brand for the site, to be completed in two-and-a-half to three years.'

While Ms Choo would not give details of the brand, she said that the new hotel at Kallang/Jellicoe roads is already in the 'development stage' and will be a three-and-a-half to four-star tourist class establishment.

The Urban Redevelopment Authority closed the tender for the site on Oct 9, with only one bid of $51 million from Citywide Land.

Based on the site of 45,415 sq ft and a maximum permissible gross floor area of 204,363 sq ft, the unit land price works out to $249.56 per sq ft per plot ratio (psf ppr).

Citywide Land's bid was the same as the committed bid received by URA in August that led to the reserve list site being put up for public tender.

When the tender was closed last week, market watchers were uncertain if the site would be awarded as only one bid came in.

According to Cushman & Wakefield managing director Donald Han: 'Technically speaking, the bid does reflect the market price.'

He noted that as the committed bid was made in August, several months before the recent meltdown in the global financial markets, it is not unreasonable to expect that the market price could be even lower today.

He also believes the site may have been awarded because of a shortage of hotel rooms here and to 'jumpstart' the rejuvenation of the Kallang area.

Based on the bid price of $51 million and a projected yield of 8 per cent, Mr Han reckons room rates could be in the vicinity of $100-$120 a night.

Knight Frank director (research and consultancy) Nicholas Mak said that it is rare for a development site to be awarded at the trigger price, but the business environment does look challenging.

Despite the credit crunch, he reckons Citywide should not find it too difficult to get funding for the project. Lenders are likely to see potential value in the site because Citywide Land's winning bid is 60-80 per cent lower than some earlier estimated prices in August.

Also in August, a hotel site at Balestier was awarded even though the top bid was below market expectations at $172.09 psf ppr.

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