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Jurong hotel site draws surprise top bid of $238m

Jurong Hotel Site | SGRealist.com21-Nov: With the Jcube recently opened this year and Lend Lease’s shopping mall – Jem – to be completed by mid 2013, the Jurong Gateway is set to be a bustling hub in the years to come! And now as surrounding parcels of land along Jurong Town Hall Road and Jurong Gateway zoned commercial, there will be a critical mass of business operating in Jurong East, other than the current International Business Park (IBP).

Jurong hotel site’s top bid of $238m

A record price has been set for hotel land in Singapore – $1,167.35 per square foot per plot ratio (psf ppr). This is for the first hotel development site, a 99-year lease and maximum permissible gross floor area of 18,957sqm, at Jurong Town Hall Road.

A state tender drew 11 bids from major players in the industry including Ascott Holdings, City Developments and United Engineers Developments but Tamerton Pte Ltd, a wholly owned subsidiary of Resorts World Singapore (RWS) topped them all with its $238.2 million bid.

“The enthusiastic bidding shows developers’ confidence in the development of Jurong East into the next major commercial hub outside the central business district (CBD),” Mr Lee Sze Teck, senior manager of training, research and consultancy at property firm Dennis Wee Group.

Far East Organization unit Boo Han Holdings in partnership with the group’s listed vehicle, Far East Orchard, submitted a bid of $204.8 million or $1,003.56 psf ppr, placing it in second position.

This was 16.3 per cent lower than the top bid by RWS, which is also a wholly owned subsidiary of Genting Singapore.

Foray into Jurong a strategic move

HSR Property Group special adviser Donald Han said RWS’s foray into Jurong is a strategic move aimed at capturing the Malaysian visitors market.

“If they do not cater to some of their clients from Malaysia, who patronise their casinos but who do not have the budget for the $300-$400 rooms in Sentosa, they would lose out significantly on a potential income base,” Mr Han explained.

He added that the hotel development would most likely be a three-star property. The Jurong Country Club is just behind the hotel site and there will be plenty of retail amenities such as JCub, Jem, Westgate, IMM, Big Box in Jurong East.

Other bidders for the site were United Engineers Development ($984.50 psf ppr), Legend Land which is linked to Hotel 81 ($950.74 psf ppr), and City Development’s Redvale Investments and Redvale Developments ($784.12 psf ppr).

Though the record bid by Genting Singapore surprised most analysts BT spoke to, they are confident about demand for the upcoming hotel.

“The estimated breakeven of between $550,000 to $580,000 per room may appear to be slightly on the high side for an untested area like Jurong East, but it could still be acceptable for Genting which, because of synergies arising from its RWS operations, has a captive market to itself. Filling up the bulk of the rooms should therefore be more confidently executed for them than by others,” explained Savills Singapore research head Alan Cheong.

Other than providing accommodation for visitors to RWS, the hotel will also be well placed to cater to the growing business community in Jurong East, explained Mr Han.

“The timing is right and the fact that the hotel will be ready in the next three years or so, it will be right where the action is when the surrounding developments in Jurong Gateway are completed,” Mr Han said.

Promising long-term plans for Jurong Gateway

Said Jones Lang LaSalle national director Ong Teck Hui: “The long-term plans for Jurong Gateway do look very promising with a strong mix of office, retail, residential, hotel, entertainment and food & beverage uses. The site’s close proximity to Jurong East MRT station, upcoming developments like Jem, Westgate and others make it particularly attractive.”

RWS currently owns six hotels with 1,500 rooms. This development is the group’s first hotel away from Sentosa.

Sengkang Square site attracts top bid of S$383.3m

A WELL-SITED residential plot in Sengkang Square has attracted five bids – weaker interest than industry experts had expected. EL Development put in the top bid of $383.3 million, or $527.65 per sq ft per plot ratio (psf ppr).

White Haven Properties came in second with a pitch of $348 million, or $479.02 psf ppr. The lowest bid, from Singland Development and UOL Venture Investments, was $301.8 million, or $415.42 psf ppr.

Put up for tender on 16 April and slated for condo or flat development, the Sengkang Square/Compassvale Drive site measures 22,497.6 sq m and could yield around 710 units. With prior approval, the 99-year leasehold site may also be developed into a combination of flats and strata landed houses.

The successful developer can build condominiums or flats on the 22,498 sq m site, or seek approval for a combination of flats and strata-landed homes. Credo Real Estate executive director Ong Teck Hui had expected the site to draw eight to 12 bids, given its proximity to Sengkang MRT station and Compass Point.

In addition, he noted: ‘It’s a firm top bid… surpassing that for The Luxurie site next door which was sold in March 2011 for $502 psf ppr.’

Chia Siew Chuin, Director of Research & Advisory at Colliers International, noted that response for the site was “relatively lukewarm” compared to the 12 bids received for a residential site at Boon Lay Way (Jurong Gateway) on Tuesday. Colliers said this was due to the availability of many well-located condominium sites whereby the tenders will close next month.

“Nevertheless, EL Development Pte Ltd put in an optimistic bid, topping the five-way tender at S$383.33 million or S$527.65 psf per plot.”

CBRE executive director (residential) Joseph Tan said ‘the quantum of the bids signifies developers’ confidence in mass-market housing and in sites that are located near MRT stations’. He noted that the top bid ‘translates to a break-even cost of $900 psf to $950 psf’.

Sengkang Square Site | SGRealist.com

EL Development managing director Lim Yew Soon said potential buyers can expect a condo comprising 14 blocks of 15 storeys each. He added that the selling price would be around $1,000 psf to $1,050 psf on average.

Meanwhile, the Urban Redevelopment Authority (URA) has announced the final tender results for the Boon Lay Way (Jurong Gateway) siteMCL Land Limited won the tender after offering a top bid of S$369.388 million, which works out to around S$705.10 psf ppr. The 99-year leasehold site is estimated to yield 590 units.