Second Transitional Office Site Released

Source : The Business Times, 25 September 2007

THE government yesterday launched for sale its second transitional office site in a bid to improve the supply of office space.

Market watchers estimate that the 1.2 hectare site in Tampines could fetch about $100 per square foot per plot ratio (psf ppr) - which works out to some $12.4 million in total.

The land parcel is the second transitional site offered by the Urban Redevelopment Authority (URA) as office rents in Singapore continue to climb amidst a supply shortfall.

Transitional office sites are expected to help tide over the space shortage until new supply starts to kick in from 2009 onwards.

URA in August awarded the first transitional office site at Scotts Road. That site attracted 11 bidders, with the winning bid coming to $37 million, or $219 psf ppr.

The new site, which has a maximum gross floor area of 124,000 sq ft and a 15-year lease, is expected to fetch a lower price as it is not in the central area.

'The Scotts Road site can fetch rents of between $7 and $8 psf per month, while this site will be able to get only about $4-$5,' said Ku Swee Yong, director of marketing and business development at Savills Singapore.

Some experts were more bullish, however.

Knight Frank director of research and consultancy Nicholas Mak expects the site to fetch between $200 and $260 psf ppr, similar to the Scotts Road site. That price works out to $24.8-$32.2 million.

'With the current absorption rate of office space at 91.9 per cent, coupled with a shortage of Grade A office space in the prime area, demand for suburban offices with good location and well-developed infrastructure is in strong demand,' said Mr Mak.

'The office space that will be developed on this site is likely to be attractive to banks and financial institutions to house their backroom operations.'

The land parcel is located at Tampines Concourse/ Tampines Avenue 5 - within the established Tampines Regional Centre.

The upcoming office building will be within walking distance of the Tampines MRT station and bus interchange.

The building is expected to be a low-rise development of about three storeys that can be built quickly in about a year, URA said.