Friday, October 12, 2012

Forward Land tops bids for Jalan Sultan site

OCTOBER 12, 2012
Business Times
Forward Land tops bids for Jalan Sultan site
Its $331.34m offer is well clear of next highest, $303.68m

Forward Land yesterday emerged as the highest bidder in a state tender for a plot at the corner of Jalan Sultan and Victoria Street.

The offer for the 0.84 hectare site, zoned for hotel development or commercial and residential development, came from the Choo family, which has a stable of hotel brands that include Hotel 81, Value and V.

Its bid of $331.34 million, or $993.71 per square foot per plot ratio (psf ppr), pipped the one from a Hoi Hup-Sunway tie-up, which at $303.68 million ($910.77 psf psf ppr) was 8.3 per cent lower.

The tender drew nine bids in all.

A Forward Land spokeswoman told BT last evening that the group plans to allocate at least 60 per cent of the maximum gross floor area allowed for the plot to hotel use, with the rest of the space going towards commercial use.

This is in line with requirements set by the Urban Redevelopment Authority (URA), which estimates that the space can generate about 650 hotel rooms.

The Forward Land spokeswoman said that the proposed hotel was likely to be a four-star property carrying a new brand to be minted. Among the group's existing offerings, V is a four-star brand, according to her, while Hotel 81 and Value are economy hotels.

The site, with views of Rochor River, is about 250m away from the group's V Hotel Lavender, which has triple frontage along Kallang, Horne and Jellicoe roads.

HSR Property Group special adviser Donald Han yesterday described Forward's bid as "aggressive".

However, based on a breakeven cost of about $460,000 per hotel room and the current room rates levied at V Hotel Lavender, he estimated that Forward's breakeven cost for a hotel development would still produce a nearly 5 per cent net yield.

"There's an upside, as hotel room rates are expected to improve for the segment. In addition to demand from business and leisure travellers seeking mid-scale accommodation, the hotel should benefit from sports tourism when the Sports Hub is completed," he said.

As the sole bidder in an October 2008 tender, the Choo family paid $249.56 psf ppr for the V Hotel Lavender site, which is next to Lavender MRT station.

Meanwhile, Far East Organization unit Boo Han Holdings has partnered the group's listed vehicle Far East Orchard to submit a bid for around $767 psf ppr, placing it in fifth position.
Three units of City Developments, bearing names beginning with "Redvale", joined forces for the sixth-highest bid at $753 psf ppr.

Fragrance Group's unit Fragrance Regal offered around $611 psf ppr, making it the second-lowest bidder; the lowest came from Kheng Leong's unit Peak Sky ($531 psf ppr).

URA has stipulated that if the land parcel is developed for hotel use, at least 60 per cent of the total gross floor area (GFA) of 333,433 sq ft must be allocated for hotel rooms and hotel-related use. The remaining GFA can be put to commercial and/or residential use.

If the site is developed into a commercial and residential project, at least 60 per cent of total GFA has to be set aside for residential use, and a minimum 30 per cent, for hotel rooms and hotel-related use, leaving up to 10 per cent for commercial use.

DWG senior manager Lee Sze Teck said that Forward Land's top bid yesterday was "third time lucky", as the group had lost out in the last two hotel tenders, one each in Jalan Bukit Merah and Rangoon Road, in the past year.

Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle, said that the top bid was "quite in line for a city-fringe site like this, for the uses permitted".

He said that the site was favourably located near Lavender MRT station and a few stops from the heart of the city. "Shopping, eating and other amenities are all nearby, so hotel guests or residential occupiers would find the location very convenient."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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