ST : Tanjong Pagar site draws $1.7 billion bid

Nov 17, 2010

Tanjong Pagar site draws $1.7 billion bid

GuocoLand's offer is second-highest ever for government land

By Cheryl Lim

A PRIME hotel and office development site right next to Tanjong Pagar MRT station has drawn the second-highest ever bid for government land: $1.71 billion.

Units of developer GuocoLand, controlled by Malaysian billionaire Quek Leng Chan, submitted the bullish offer, which was well above market expectations.

The tender closed yesterday with six bids for the sprawling 1.5ha plot at the corner of Peck Seah and Choon Guan streets.

Five of the bids were above $1 billion - the level analysts had predicted. Among them were offers from a consortium including Hongkong Land; Frasers Centrepoint; and a firm linked to CapitaLand.

GuocoLand's bid works out to $1,006 per sq ft per plot ratio.

Consultants said the site is set to become a landmark development in the heart of Tanjong Pagar, which is being touted as Singapore's next property hot spot. The area will be transformed into a vibrant waterfront precinct when its container terminals move out.

A nearby site, where Keppel Towers and GE Tower stand, was recently bought by developer Keppel Land for $573 million. It plans a major residential project.

Property firm Cushman & Wakefield's managing director Donald Han said the bullish bids for the Peck Seah Street site are reminiscent of the booming pre-crisis market. In 2007, a Marina View parcel drew a $2 billion top bid - the highest ever - while the South Beach development drew a $1.69 billion offer.

The Peck Seah Street plot will host an office and hotel complex that could include apartments. It can hold a maximum gross floor area of nearly 1.7 million sq ft.

At least 60 per cent of the site's area must be devoted to offices and 10 per cent to hotel rooms, but the winning developer can do whatever it wants with the remaining 30 per cent. Property experts believe the space is most likely to be used for high-end condominium units.

CBRE Research executive director Li Hiaw Ho said this would make sense, 'given the growing popularity of inner-city living in the last few years'.

'The development of this mammoth project in the heart of the Tanjong Pagar area would inevitably achieve landmark status, and would further propel the Tanjong Pagar area into a growth region for commercial activity.'

He expects apartments at this 'mega development' to sell at $2,400 to $2,500 psf. Newly launched apartments in nearby projects have been transacted at between $2,000 and $2,500 psf.

Mr Ong said: 'The development has a strong advantage being on top of an MRT station, which should see it attracting lots of buyers and commanding high prices.'

Credo Real Estate executive director Ong Teck Hui said the top few bids reflect confidence that the strong office and residential markets can be sustained.

If GuocoLand is awarded the tender, the project will mark its maiden foray into the Singapore hotel market.

cherlim@sph.com.sg