Landmark conservation building to be turned into a hotel
OGILVY Centre, a landmark conservation building opposite Lau Pa Sat, is now open for application under the reserve list.
Prospective bidders will be allowed to bid for the site, which is designated for hotel use, on either a 30- or 60-year lease term, the Urban Redevelopment Authority (URA) said yesterday.
BT understands that Ogilvy, which has until the end of this year to move out from the state-owned property, has already inked a lease for about 60,000 sq ft at 71 Robinson Road.
Cushman & Wakefield Singapore managing director Donald Han said the Ogilvy Centre site, at the corner of Robinson Road and Boon Tat Street, will be highly sought after, given that there are few hotel investment opportunities in prime locations in Singapore involving under 150 rooms.
Also, the choice of lease terms - at 30 or 60 years - will help to make the investment affordable to a broader pool of investors.
'However, most bidders will probably opt for a 60- year leasehold tenure as the hotel business is pretty capital intensive and 30 years may be too short for a viable investment, inclusive of an exit strategy,' Mr Han said.
Developers keen on buying the site may now apply to URA to put it up for tender.
A range of investors could be interested - including those keen on positioning the property as a luxury property like an Armani Hotel or possibly an affordable, stylish concept like Indigo by the InterContinental Hotels Group, Mr Han suggested.
The land parcel includes a historically and architecturally significant conservation building designed in the Neo-classical style, URA said. Built in 1927, it is an important heritage landmark, representative of Singapore's business district in the first half of the 20th century. It was accorded conservation status in February 2000.
The future developer would have to retain the existing four-storey conservation building.
However, the rear part of the existing building may be demolished, redeveloped and integrated as a new five-storey extension.
Mr Han says one major drawback of the property is that it will be difficult to provide a drop-off point along Robinson Road, which forms the front of the building/hotel.
'The drop-off point is likely to be created along the back lane at Boon Tat Link as part of the extension block. That will knock one star off the hotel's rating,' he said.
URA said the property can have a maximum gross floor area of 80,191 sq ft inclusive of 43,228 sq ft from the conservation building.
The site is being offered as part of the first half 2010 Government Land Sales Programme. It can yield about 70 hotel rooms and about 12,920 sq ft gross floor area of commercial space.
However, Cushman's Mr Han says the room count from the hotel could be higher at about 120-130 rooms, with commercial space mostly for ground-floor restaurants.
Based on his model, the land price on a 60-year lease could be about $480 per square foot of potential gross floor area or $38 million.
It could cost a further $28-36 million to spruce up the conservation property, build the new extension and fit out and furnish the hotel, taking the all-in investment to about $66 million to $74 million.
URA said that for the purpose of tender evaluation, bids submitted for a 60-year lease term will be normalised to their 30-year equivalents by using the formula derived from the Singapore Land Authority's Leasehold Table.
Source: Business Times, 23 Jun 2010