A CONSORTIUM led by Low Keng Huat (Singapore) beat nine other offers - including those from heavyweights such as CapitaLand, Far East Organization and Hong Leong Group - with its top bid for a commercial land parcel in Paya Lebar Central.
Low Keng Huat, together with partners Guthrie Properties and Sun Venture, offered $585.6 million or $872 per square foot per plot ratio (psf ppr) for the 99-year leasehold plot at the close of the state tender yesterday.
Low Keng Huat, which holds the majority stake in the consortium, said it intends to build an 'iconic' development which will appeal to end-users on the site.
The company is keen on the site as it is next to Paya Lebar MRT station and will benefit from the government's plan to develop Paya Lebar Central into a regional centre, it said.
The developers have to set aside at least 80 per cent of the total gross floor area (GFA) of 671,450 sq ft for office use. The remaining 20 per cent will be retail space, Low Keng Huat added.
The consortium's bid was some 12 per cent above the second highest bid, which was from Hong Leong Group. Hong Leong offered $521 million or $776 psf ppr.
The top bid was also 76 per cent higher than the lowest bid, which was from Frasers Centrepoint and the ARA Asia Dragon Fund. The partners offered $332 million or $494 psf ppr.
Other bidders included Keppel Land and Temasek Holdings' property arm Mapletree Investments.
Analysts predicted a top bid in the range of $500-600 psf ppr for the site when the tender was launched in January 2011.
Cushman & Wakefield managing director Donald Han said yesterday that the top bid 'seems aggressive'. But he pointed out that the outlook for the office market has picked up since the site was launched for sale three months ago.
The bullish bids were underpinned by the demand for more affordable office space outside the central business district (CBD), which investors are trying to capitalise on, said Credo Real Estate executive director Ong Teck Hui.
'Between 1992 and 2010, the growth in supply of office space has been strongest in the fringe area (a growth of 135 per cent), even higher than downtown core (where there was growth of 81 per cent), and this reflects the build-up in response to demand for more affordable office space outside CBD,' said Mr Ong.
Analysts noted that if the site is developed into a quality commercial development, it will boost the government's objective of growing Paya Lebar Central into a regional centre. This site is the first plot the government has offered for sale in the area. The strong demand from developers means that the government is likely to release more sites in Paya Lebar Central in the second half of this year, Mr Han added.
The government's vision is for Paya Lebar Central to become a bustling commercial centre, with a mix of office, retail, hotel and public spaces. The precinct has about 12 hectares of land available for development and a potential commercial floor space of more than five million sq ft in total.