Capitaland
tops Orchard Turn bid
Friday December 9, 2005
Valerie Law
valerie@newstoday.com.sg
It
offers $1.38 billion for the site together with Sun Hung Kai Properties
THE
tender for the Orchard Turn site received eight bids from top local
and foreign property developers.
CapitaLand
together with Hong Kong developer Sun Hung Kai Properties came out
tops with a bid worth $1.38 billion, or $1,019.70 per sq ft per
plot ratio. This is 8.8 per cent higher than the next-highest bid
of $1.27 billion from Malaysian developer IOI Land, and 16 per cent
higher than thethird-highest bid by City Developments.
Knight
Frank director of consultancy and research Nicholas Mak noted that
the completion of the development would likely coincide with the
completion of the integrated resorts. "In addition, the existence
of Reits also encouraged some developers to bid aggressively, because
these provide them an exit," he said.
Using
the top bid price, the average break even for the whole development
is estimated to be between $1,600 and $1,700 per sq ft, said Mr
Mak.
The
lowest bid of $780,000 works out to be $576.40 per sq ft.
The
bid range is not surprising, given that Orchard Turn is slated for
a major redevelopment. Developers are also given the choice to develop
high-end residences or a luxury hotel on the same site, analysts
said.
The
$1.38-billion bid is a very clear indication of the bidders' confidence
in the potential growth of Orchard Road and the retail cum tourist
scene in Singapore, said Ms Soon Su Lin, executive director of Investment
Properties at CB Richard Ellis.
"Assuming
an average overall gross retail rent of around $15 per sq ft for
a retail centre at this location, the developers could look forward
to a net income yield in excess of 5 per cent on a stabilised basis,"
she added.
The
prime site is open for commercial development with an underground
shopping mall and a maximum permissible gross floor area of 125,726
sq m (1.35 million sq ft), said the Urban Redevelopment Authority.
It has a height limit of 218m above sea level, allowing it to be
the tallest along Orchard Road.
Senior
manager Wallace Chu of property consultancy Savills said that CapitaLand's
local expertise and innovative ideas from Sun Hung Kai would "ensure
this project turns out to be a success".
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