Short Street Hotel Site Attracts Strong Bids

Source : The Straits Times, June 11, 2009

A SMALL hotel site in Short Street has received 15 bids, with the winning tender coming in at more than double the trigger price.

Budget hotel chain Fragrance Group's bid of $15.5 million, or $353 per sq ft (psf) per plot ratio, is about 76 per cent higher than the trigger of $201 psf per plot ratio, or $8.8 million.

The price is more in line with analysts' projections last August, when the site was first made available on the Government's land sales list, than recent ones.

The second highest bid - from Hotel 81's Regal Land - was at $14.01 million, or $319 psf per plot ratio.

Centurion Properties, largely owned by UOB-Kay Hian stockbroker pair Han Seng Juan and David Loh, put in the third-highest bid of $12.89 million, or $291.70 psf per plot ratio.

Other bidders included Sim Lian Land, Hotel Royal Investment, Wah Khiaw Developments, Mayhew, Heeton Commercial and Orchard Parade Holdings' First Choice Properties. The first nine bids all came in above $10 million.

Singapore's largest bar chain operator, Harry's Holdings, which recently said it was keen to buy a small hotel, also put down a bid - at $9.5 million or $217 psf per plot ratio.

'The strong response to the tender of the Short Street site signals that hoteliers still believe in the fundamentals of Singapore as a tourist destination and its long-term ability to attract tourists,' said CBRE Research director Leonard Tay.

The Urban Redevelopment Authority put the 99-year leasehold Short Street hotel site up for tender when an unnamed developer triggered it for sale after committing to a minimum bid of $8.8 million. It is a reserve list site, which is put up for sale only if developers indicate their interest.

The 14 valid bids received - the 15th undercut the trigger bid - reflect a return of interest for development sites with good attributes, Mr Tay said.

Given that the site area is relatively small and construction costs are expected to decline this year, the overall investment should not prove costly, making this an attractive opportunity for developers and hoteliers, he added.

The site, which has a maximum gross floor area of 43,885 sq ft, can accommodate around 90 rooms.

Apart from the affordable investment sum, the site's location within the Bras Basah/Bugis district was another key factor, said Colliers International's director for research and advisory Tay Huey Ying.

Mr Leonard Tay said its location near the upcoming Rochor MRT station and the Bugis area meant that a themed or design-oriented boutique hotel would be most likely.

A new boutique hotel could capitalise on the growing arts scene in the Bugis area and cater to tourists looking to stay in a hotel offering something more than a typical hotel chain, he said.

For now, the hotel industry is faced with rising supply, shrinking revenue per available room and falling visitor numbers.

No new hotel sites were added to the Government's land sales programme for the second half of the year. It already has nine hotel sites available for tender.