Breakeven cost for full retail development under $2,000 psf: CEO
Entities linked to fund manager Pramerica Real Estate Investors (Asia) placed the top bid of $800.9 million or $850 per square foot of potential gross floor area for a plum 'white' site above Serangoon MRT Station.
The plot is expected to be developed into a sizeable mall with a net lettable area of about 650,000 sq ft. This would be similar to Parkway Parade and IMM.
Pramerica Asia chief executive Victoria Sharpe told BT that the group is planning a full-retail development on the site, and that its breakeven cost would be 'slightly below $2,000 per square foot (psf)' of net lettable area.
Based on this estimate, analysts reckon that Pramerica Asia's total investment in the development would be around $1.3 billion.
The tender for the site at Serangoon Central, conducted by the Land Transport Authority, attracted six bids.
Pramerica Asia's bid was 10 per cent higher than the next highest offer of $727 million or $772 psf per plot ratio (ppr), by a unit of Australia's Lend Lease Group.
'We're an experienced retail player in Singapore and we're very pleased with the outcome today. This is a site in a premier location, integrated with the MRT stations,' Ms Sharpe said.
The 269,180 sq ft plot is above both the existing Serangoon North East Line station and the Serangoon Circle Line station which will open next year.
The plot is expected to be developed into a sizeable mall with a net lettable area of about 650,000 sq ft. This would be similar to Parkway Parade and IMM.
'The proposed mall's location at a strategic intersection of the present North East Line and the future Circle Line, as well as its size, will allow the centre to not only tap into the existing traffic from Serangoon, Ang Mo Kio, Hougang and Sengkang but will probably be a major magnet for shoppers living beyond these immediate housing estates,' CB Richard Ellis executive director Li Hiaw Ho said.
Suburban malls in Singapore are currently valued at about $1,800-2,000 psf.
'Assuming an average overall gross monthly retail rental of about $12-13 psf that is achievable for a retail centre in this location, the developers could look forward to a net income yield of about 5.5 per cent on a stabilised basis,' he added.
Ms Sharpe said that the asset is likely to be held by several funds managed by Pramerica Asia including its pan-Asian funds - like the Asia Property Investment Fund and possibly its Asian Retail Mall Fund (ARMF) series.
Gold Ridge Pte Ltd, the entity that Pramerica used to bid at yesterday's tender, is owned by ASPF II (Mauritius) Ltd and Yunnan Gold (Mauritius) Ltd.
ARMF I owns four malls in Singapore - Tiong Bahru Plaza, White Sands in Pasir Ris, Century Square in Tampines and Hougang Mall - while ARMF II owns Liang Court and is also developing the Tampines 1 mall.
The other parties which bid for the Serangoon Central site were a unit of Frasers Centrepoint, which bid about $750 psf ppr; a joint venture involving the trustee for CapitaMall Trust, NTUC Income Insurance Co-op and NTUC FairPrice Co-op ($702 psf ppr); a tie-up between City Developments, Hong Leong Holdings and TID ($426 psf ppr); and Peak Properties ($228 psf ppr).
The plot had been expected to draw top bids of about $600-700 psf ppr. The 'white' site can be developed into any combination of the following uses: commercial, hotel, residential, and sports and recreational. But the 'highest and best use' for the property is retail, property consultants say.
Separately, the Urban Redevelopment Authority yesterday made available for application two 99-year leasehold reserve list sites - a hotel plot at the corner of Clemenceau Avenue and Havelock Road, and a private condo site at Upper Changi Road North/Flora Drive, next to Edelweiss Park Condo.
Mr Li estimates that the hotel site could be worth around $700-750 psf ppr, based on the $805 psf ppr and $762 psf ppr prices that two 99-year hotel sites at Upper Pickering Street and New Market Street/Merchant Road respectively fetched last October. 'The hotel sector is bursting at the seams but it can be hard getting funding because of the credit squeeze,' he said. Knight Frank director Nicholas Mak's estimate of the site's value is slightly lower, at $600-650 psf ppr. The Upper Changi condo plot is expected to fetch about $180-250 psf ppr, property consultants said.
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