BT : 1st site at Jurong Lake District put up for sale

Business Times - 09 Apr 2010

1st site at Jurong Lake District put up for sale

Unnamed developer commits to bid at least $350m for 1.9 ha parcel

By UMA SHANKARI

THE government will launch a 99-year leasehold mixed-use site at Jurong Lake District in two weeks - the first plot put up for sale there since the masterplan for the area was unveiled two years ago.

The Urban Redevelopment Authority said yesterday that an unnamed developer has committed to bid at least $350 million for the 1.9 ha parcel, triggering a public tender.

The site, at Jurong Gateway Road next to Jurong East MRT station, has been on the government's reserve list since November 2008.

'The triggering of this site is exciting because it's the first sign of the private sector's endorsement of the government's vision for Jurong Lake District,' said Tay Huey Ying, director of research and advisory at Colliers International. 'Hopefully, this will catalyse more developments in the area.'

In April 2008, the government unveiled plans to transform the 360 ha Jurong Lake District - about the same size as Marina Bay - into a major regional centre. The aim is to provide an attractive location for commercial developments outside the city centre and a world-class leisure destination by the lake. But no sites have been sold to the private sector yet.

The newly triggered site can provide a maximum gross floor area of 1.15 million square feet. The minimum bid price works out to $304 per sq ft per plot ratio (psf ppr).

Most analysts BT spoke to said it is difficult to pin down a likely top bid because the parcel is classified as a 'white' site - which means the winning bidder can put it to commercial, residential or hotel use. URA requires at least 30 per cent of the maximum possible gross floor area to be set aside for office use.

But some analysts guessed the site could fetch around 1.5 times the minimum bid price. They also expect the winning developer to set aside a significant amount of the gross floor area for retail use, which will provide a better yield.

However, the number of bids will be limited by the size of the site and the 30 per cent office use requirement, they added.

Colin Tan, director of research and consultancy at Chesterton Suntec International, said the tender period of about eight weeks may not be enough for interested parties to get ready, especially since the size of the site means developers may look for partners to submit joint bids.

'The bids are likely to come from consortiums,' Mr Tan said. 'So the developer or group that triggered the site probably has a head start. Other interested bidders may have to scramble from today to put a consortium together.'

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