Govt Rejects Aljunied Site Bid; Offers Flood Jalan Sultan Plot

Source : The Straits Times, Jan 23, 2008

THE Government has decided not to sell a short-term office site in Aljunied because the sole bid that came in last week offered too low a price.

This decision follows a recent string of lower-than-expected offers for state land and is the first time since 2001 that the Urban Redevelopment Authority (URA) has rejected bids for a government-owned site.

Demand for some commercial land, however, appears to still be going strong. A state parcel at Jalan Sultan, reserved for office or hotel use, received 20 offers when its tender closed yesterday, the URA announced.

The top bid came from Chiu Teng Estates. It offered $14.8 million, or $973.60 per sq ft (psf) of gross floor area, almost double the lowest bid, from NYP Holdings, of $8 million.

The Jalan Sultan site, comprising 17 two-storey conservation shophouses that have to be restored, also got offers from Fragrance Group, Hotel Royal and Hind Lifestyle.
This compares to the single bid for the Aljunied office site, submitted by Mezzo Development, at $7.8 million - just $38.37 psf of gross floor area.

Property consultants say the market may have reached a saturation point for transitional office sites, introduced last year as a quick relief to the office space crunch.

Any development built on these short-term sites is likely to be completed only next year or in 2010, when they will have to compete with a slew of new office space set to come onstream, they added.

One such building is the new $60 million Straits Trading block in Battery Road. The 28-storey building is expected to be completed late next year and could fetch high rents of $18 psf, analysts estimate.

Average rents of Grade A blocks in Raffles Place are now $16.64 psf, said Colliers International. The old Straits Trading building fetched rents of $7 psf.

Mainboard-listed Straits Trading, which owns the building, brushed aside worries that it would be affected by a possible office oversupply that could emerge after 2010.

'If there's an oversupply, our building will be out before that,' said president and chief executive Norman Ka Cheung Ip.