Bids galore for hotel site on Short St

A government tender for a small hotel site on Short Street closed yesterday with a whopping 14 valid bids received – which analysts said reflects market interest in development sites with good attributes.

The highest bid came from Fragrance Group. It offered $15.5 million – or $353 per square foot per plot ratio (psf ppr) – some 76 per cent higher than the trigger price of $8.8 million, or $201 psf ppr.
The top bid was also 74 per cent higher than the lowest valid bid of $8.9 million, or $203 psf ppr, submitted by SCM (Overseas).

Various other companies also bid for the 99-year leasehold site – including property groups such as Sim Lian Land, Orchard Parade Holdings, Heeton Holdings, Wah Khiaw Developments and Regal Land, the company behind the Hotel 81 chain, as well as the Harry’s chain of pubs.

Analysts said the small size of the site is one of its main selling points. The number of bids – 15 in all, including one bid judged invalid because it was below the minimum bid price – is one of the highest received for a Government Land Sales (GLS) tender.

‘As the site area is relatively small and construction costs are expected to decline this year, the overall investment should not be very costly, making this an attractive opportunity for developers and hoteliers,’ said Leonard Tay, director of CBRE Research.

The strong response to the tender also signals that hoteliers still believe in the fundamentals of Singapore as a tourist destination and its long-term ability to attract visitors, he added.

The site has a maximum gross floor area of 43,885 sq ft. Given its location near the upcoming Rochor MRT station and the Bugis area, a boutique hotel would be most likely, analysts said.

The site was launched for public tender on April 15. It was originally on the Reserve List of the GLS programme.

Last week, the Ministry of National Development said it would continue its suspension of the Confirmed List for the July-December period. It also made little increase to the reserve list.

Source: Business Times, 11 Jun 2009