A hotel site in Singapore’s Chinatown area sold for a record price per square foot at a government land sale this week, according to an announcement by the Urban Redevelopment Authority, as investors continue to show confidence in the city’s commercial real estate market.
A subsidiary of Worldwide Hotels Group agreed to pay S$562.2 million ($415.12 million) for the 5,121 square meter (55,121 square foot) plot on Club Street, which works out to S$2,148.50 per square foot — the highest price ever for a 99-year leasehold site at a government auction.
The land purchase is the second major acquisition by Worldwide Hotels in less than two months, as the company which rose to prominence thanks to its portfolio of hotels in Singapore’s red light districts, expands into more upscale areas of the Southeast Asian financial capital.
Buying a Rare Hotel Site in Singapore
Worldwide Hotels triumphed from among a field of eight bidders — fewer than the dozen or so bids expected for the first hotel site to be made available at a government auction since 2008 — but still outpaced the next highest bidder by 12.4 percent. That second place bid came from a partnership between Singapore-listed property companies UOL Group and UIC Limited, with Robert Kuok’s Shangri-La Group said to have placed the third-highest bid, according to the Straits Times.
Carolyn Choo, managing director of Worldwide Hotels told the local press that the group plans to develop a four-star property on the site that will be the group’s landmark asset. She estimated that the total investment for the project, including construction, interest and fitting-out expenses, would be in the high S$700 million range.
Worldwide Hotels is said to be planning to develop the property into an 800 room economy hotel, and the property also includes a 4,800 square meter commercial component.
The Club Street acquisition ccomes just seven weeks after Worldwide Hotels agreed to pay S$276.2 million for the Golden Wall Centre in Singapore’s Little India neighbourhood via a collective sale. Worldwide Hotels, which owns Singapore’s Hotel 81 chain and five other hotel brands, won the rights to the 36-year-old office and retail complex after it had already been approved for redevelopment as a hotel.
Private Housing Site Fails to Dazzle
In addition to the hotel site, two other 99-year leasehold sites were sold the same day, including a private home project and an “Executive Condo” project.
The winning bid for the 11,643 square meter (125,324 square feet)private housing site in Kampong Java, located near Newton MRT station, came in below market expectations at S$418.38 million ($308 million) or S$1,192 per square foot of accommodation. The lower than expected bid was a testament to the cautious mood of developers about the residential market, noted Colliers International in a statement.
The Kampong Java site drew seven bids with the top bid of S$418.38 million coming from Singapore-listed construction and property developer Chip Eng Seng, who plans to develop a project of 380 units, ranging from one-to four-bedders, based on a 32,601 square meter (350,914 square feet) maximum permissible gross floor area. At S$1,192 per square foot per plot ratio, Colliers said it expects a breakeven price of S$1,700 per square foot and a selling price of S$1,900-2,000 per square foot.
“Chip Eng Seng has been rather successful with its launch of Park Colonial last July, and is ready to replenish its landbank,” Tricia Song of Colliers said in a statement.
EC Site Fetches Second-Highest Price Ever
Home builders, however, demonstrated more optimism towards the hybrid-subsidized housing, or so-called executive condominium (EC) segment, with the top bid for the Tampines Avenue 10 plot reaching S$434.45 million ($320.80 million) or S$578.12 per square foot of built area, the second highest on record for EC land in Singapore.
The subsidized housing development site in Tampines fetched seven bids, with the highest, at S$434.45 million or S$578.12 per square foot coming from a partnership between Singapore-based developer Hoi Hup Realty and Sunway Development. The joint bid edged a S$431.62 million offer from Hongkong Land affiliate MCC Land (Singapore).
“Executive condominiums remained popular with developers post-measures given the limited supply,” said Song. “The new minimum average unit size of 85 square meters should also have minimum impact for executive condominiums as (they) are targeted at families in the first place and the average unit size suggested by the development cap of 700 units is well above the 85 square meters,”she added.
The brokerage said it expects a breakeven price of S$920 square foot per plot ratio and a selling price of S$1,050 per square foot for the project.