Wednesday, January 12, 2011

Far East emerges top bidder for Tanjong Pagar hotel site

FAR East Organization is likely to include some apartments in its scheme for a hotel site in the Tanjong Pagar area for which it emerged as the top bidder yesterday.

The property giant offered a higher-than-expected $194.77 million or nearly $932 per square foot per plot ratio (psf ppr) for the 99-year-leasehold plot opposite its Icon and Altez residential developments. The tender drew seven bids.

Far East said yesterday that its proposed scheme for the plot, at the corner of Gopeng Street and Peck Seah Street, is a mixed-use development that will have a primary hotel component, with retail, and food and beverage outlets on the first level, as well as residential or commercial units.

'We will be engaging acclaimed local and international designers to help us conceptualise a distinctive, stylish designer hotel that will bring greater life and energy to the precinct and strengthen the government's plans to transform Tanjong Pagar into the new lifestyle destination,' said Far East executive director (development and planning) Chng Kiong Huat.

Far East's bid was about 3 per cent higher than the next highest offer of $904 psf ppr by Overseas Union Enterprise (OUE). Both Far East and OUE also took part in last week's tender for the Ogilvy Centre site on Robinson Road which is designated for hotel use.

That site has been awarded on 60-year-leasehold tenure to Royal Group Holdings, linked to Asok Kumar Hiranandani, for $1,072 psf ppr.

As for the Tanjong Pagar hotel plot tendered yesterday, Far East's top bid was significantly higher than the $650-$750 psf ppr range that Cushman & Wakefield Singapore vice-chairman Donald Han had predicted in November when the site's release was announced.

Mr Han said yesterday that bidders could support strong bids by including a residential component.

'Prices of inner-city apartments have already crossed the $2,000 psf level,' he noted.

He also observed that bids for hotel sites at state tenders have been rising due to the strong performance of the hotel market. This has also increased many hotel chains' appetites for expanding their presence in Singapore.

'There's virtually no hotel in Singapore available for sale as owners have been enjoying roaring business over the past year. As a result, anyone wanting to operate or buy a hotel here is taking the route of buying a hotel development site rather than a completed property,' Mr Han said.

The plot tendered yesterday is a stone's throw from two other hotel sites sold by the government in 2007. One plot was sold for $123 million or $573 psf ppr to Carlton group, and the other was sold for $97.07 million or $562 psf ppr to Chng Gim Huat of CGH Group.

The latter's 272-room Orchid Hotel will open in May, while Carlton's 383-room hotel is slated for completion in 2013. The main construction contract was awarded just a few months ago.

Neither of these two companies, nor even Amara Holdings which owns the Amara Singapore nearby, took part in yesterday's tender.

However, the site drew interest from CapitaLand unit The Ascott Ltd, which bid $188.89 million or $904 psf ppr, City Developments ($173 million/$828 psf ppr), BS Capital ($162 million/$775 psf ppr) and the Chiu family's Tang Group ($148 million/$708 psf ppr). The lowest bid of $135.8 million or $650 psf ppr was from a tie-up between Accor and LaSalle Investment Management.

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