Two Prime Residential Sites Put Up For Tender

Source : The Business Times, September 19, 2007

Bids of over $1.2b seen for Pinnacle Collection condo site at Sentosa

TWO prime residential sites have been put up for tender, including the one at Sentosa which has been creating some buzz in the market, not least because of its billion-dollar price tag.

Sentosa Cove Pte Ltd launched its final condominium land parcel - The Pinnacle Collection - yesterday with a reserve price of not less than $963.8 million or $1,600 per square foot per plot ratio (psf ppr) for the 231,676.8-sq-ft site.

In July, SC Global put in the top bid of $268.3 million or $1,799.78 psf ppr for another Sentosa condo plot, so the reserve price for The Pinnacle Collection is conservative.

Savills Singapore director of marketing and business development Ku Swee Yong expects to see bids of between $1.2 billion and $1.3 billion, and believes the hefty price tag will see more joint ventures between foreign investors and local partners.

He also said the time frame for development, which will see The Pinnacle Collection receive temporary occupation permit (TOP) around 2011 when Resorts World at Sentosa is completed, will be perfect for a developer who wants to keep part of the development as an investment property for rental returns.

The news that the development of Marina South could be accelerated, with more potential waterfront living options, is not likely to have any impact as this is not expected any time soon.

Cushman & Wakefield managing director Donald Han says the market is still fairly hot. 'The developer (for The Pinnacle Collection) will want to go in and out within a short space of time,' he said.

One condition for the site, however, is that price and design will determine the winning bid. So as with the recent Beach Road land tender, the winning bid may not necessarily go to the highest bidder.

Sentosa Cove general manager Kemmy Tan added: 'Design for this development is a key component in our evaluation.'

Design could raise the price of the units too.

'As The Pinnacle Collection is conceptualised as an iconic project, the successful developer would allocate more in the way of resources to conceive an inspiring design as well as high-end finishes,' said CBRE Research executive director Li Hiaw Ho.

As such, he estimates that the break-even cost would be between $2,800 and $3,000 psf based on a land price of $2,000 psf ppr. This would translate to an estimated selling price of about $3,200-$3,500 psf.

Separately, the Urban Redevelopment Authority (URA) put up a site in Enggor Street (Land Parcel B) in Tanjong Pagar for tender on the confirmed list of the Government Land Sales Programme.

Knight Frank director of research and consultancy Nicholas Mak reckons a condominium with about 190-210 units can be built at the site, which has been zoned 'Residential with commercial at first storey' with a maximum gross floor area of 252,091 square feet.

Mr Mak believes the site, apart from being well located, will also be attractive to developers because the URA temporarily disallowed the conversion of office use in the Central Area to other uses until December 2009, exacerbating limited supply in the area.

As such, Mr Mak expects the site to fetch bidding prices from $156 million to $177 million, equivalent to $620-$702 psf ppr.