Wednesday, June 3, 2009

URA's Kallang Riverside hotel site shrinks by half

THE first hotel sale site at the upcoming waterfront lifestyle district of Kallang Riverside has shrunk in size by half even before it hits the market.

The Urban Redevelopment Authority (URA) initially intended to release the 1.59ha site late last year but deferred it to this month - and then reduced the size to 0.74ha after taking into account market feedback.

It has placed the plot on the reserve list, meaning that interested developers can apply for it to be put up for tender.

The delay came after the URA said that it needed more time to finalise the detailed planning and development conditions of the site as they relate to the broader plans for the area.

Industry experts speculated at the time that the URA was taking advantage of the slower market to re-do its plans and that the site would be unlikely to attract interest even if made available then.

'Originally, we planned for the land parcel to have a site area of 1.59ha with a gross floor area of about 45,000 sq m,' said a URA spokesman.

But market feedback suggested that 'a smaller hotel development is preferred'. This prompted it to scale back the site's land area to 0.74ha and the gross floor area to 20,000 sq m, said the spokesman.

The hotel investment market remains weak but six months ago, it would have been even worse than now, said Knight Frank's director of consultancy and research, Mr Nicholas Mak.

He estimated that bids could come in at $48 million to $58 million, or between $215 and $260 per sq ft per plot ratio.

Still, the hotel site is not likely to be snapped up immediately as it has challenges and there will be a lot of supply coming up in the market, he added.

The site has visibility as it is in a prominent spot but is not comfortably accessible to pedestrians, for instance. Still, whoever buys this site has first-mover advantage as the area is not yet developed, said Mr Mak.

'It is an unproven hotel market,' he added. Nearby hotels are in the red-light district of Geylang.

As part of the Greater Marina Bay district and an integral part of the city centre, the Kallang Riverside is one of the key growth areas unveiled in the latest Master Plan.

Source: Straits Times, 3 June 2009

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