A joint venture involving Singapore Press Holdings (SPH) subsidiary Times Properties, NTUC FairPrice Co-Op and NTUC Income Insurance Co-op placed the top bid of $541.898 million for a mall being developed in Clementi Town Centre by the Housing & Development Board (HDB).
The top bid was 41.9 per cent above the next highest bid of $382 million, made by a joint venture involving Keppel Land’s fund management unit Alpha Investment Partners and Guthrie.
HDB is building only the core structure and facade of the mall, which it aims to hand over to the winning bidder in August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout.
Clementi Mall – the working name for the property – comprises two basement levels and five storeys above ground with a maximum net floor area of 18,000 square metres or 193,750 square feet of retail space.
An air-conditioned bus interchange will be on the first level and the third level will be connected to Clementi MRT Station.
The SPH-led consortium’s top bid works out to $2,797 per square foot (psf) based on the maximum allowable retail net floor area (NFA), says Stella Hoh, head of investments at Jones Lang LaSalle, which handled the tender exercise for the mall for HDB.
Including an estimated fitting-out cost of about $50 million, the unit price works out to $3,055 psf of retail NFA, she added.
Knight Frank managing director Danny Yeo, using a lower fit-out expenditure assumption of $40 million, says the top bid works out to about $3,003 psf of retail NFA.
‘To achieve a 5.5 per cent to 6 per cent net property yield that most investors would want today for such an asset, an average gross monthly rental of about $18 psf would be required. Right now the average rental at the best suburban malls is about $15-16 psf,’ he said.
‘If they get their tenant mix right, it would not be a problem to grow the mall’s rental level in a few years,’ he added.
When contacted, a spokesman for SPH said: ‘We intend to optimise the usage efficiency of the mall.’
He added that ‘the joint venture parties have evaluated the business case for the project and believe that it is a reasonable bid’, citing several factors, including the good catchment area.
Besides its location in Clementi Town, the property is in close proximity to the Holland, Bukit Timah and West Coast areas with key tertiary institutions such as the National University of Singapore, Ngee Ann Polytechnic, Singapore Polytechnic and UniSIM.
‘There are not many malls in the area. The property is in a high-traffic area due to integrated transport amenities and the business will provide solid and steady income stream to the JV parties,’ he added.
SPH is leading the joint venture with a 60 per cent stake, with FairPrice and Income taking 20 per cent each.
FairPrice will operate a supermarket and Income is also considering taking up some space in Clementi Mall, said SPH’s spokesman.
The other bidders at yesterday’s tender were Frasers Centrepoint Ltd ($352.1 million), the trustee of CapitaMall Trust, and Australia’s Lend Lease group.
Source: Business Times, 11 Nov 2009
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