PROPERTY developer Far East Organization has submitted the top bid of $194.8 million for a hotel site in Tanjong Pagar.

The offer, which works out to $932 per sq ft (psf), is almost double the site’s trigger price of $94 million and is 65 per cent higher than the average price paid for two adjacent hotel sites.

In 2007, the 272-room Orchid Hotel was bought by a developer for $97.1 million and another nearby hotel was purchased by Carlton Properties for $123 million.

Far East said the site will complement Icon and Altez, the other two residential properties it owns in the area.

Mr Chng Kiong Huat, Far East’s executive director of development and planning, said the plot will be mixed-use and host a hotel with retail and F&B outlets on the first level ‘as well as residential or commercial units’.

Far East already owns 1,735 rooms in six hotels – Orchard Parade Hotel, Elizabeth Hotel, Quincy, Changi Village Hotel, Albert Court Village Hotel and Landmark Village Hotel.

And its Oasia Hotel is due to open in Novena later this year.

A total of seven bids were submitted for the 0.23ha site located at Gopeng Street and Peck Seah Street in Tanjong Pagar, an area earmarked for rejuvenation by the Government.

Imperial Development, a unit of Overseas Union Enterprise, came in second with a bid of $189 million, closely followed by a $188.9 million offer from a CapitaLand subsidiary.

Next was a bid of $173 million from a unit of City Developments, and Mr Raymond Ng’s investment vehicle, Shenton Capital, came fifth with $162 million.

Hong Kong’s Far East Consortium International offered $148 million and the lowest bid of $135.8 million was from an Accor group subsidiary.

CBRE Research executive director Li Hiaw Ho said the maximum permissible area of 208,994 sq ft meant that the site could yield around 330 rooms.

The bullish response to the tender reflected continued strong demand for hotel rooms because of the increasing number of visitors to Singapore.

‘In the light of the demand for hotel rooms, we are likely to see other well- located hotel sites on the reserve list being launched for tender,’ he added.

Source: Straits Times, 12 Jan 2011

DEMAND for hotel sites is still going strong, with a land parcel at Robertson Quay coming on the market next month.

An unnamed developer has committed to bid at least $51.5 million for the 0.45ha plot right in the middle of Robertson Quay, the Urban Redevelopment Authority (URA) said yesterday.

This offer has triggered a public tender for the state-owned site, which will be launched in about two weeks’ time.

A 350-room hotel with a total gross floor area of 136,174 sq ft can be built on the land, according to the URA.

Property consultants said they expect the site to be well-received.

Mr Png Poh Soon, head of consultancy and research at Knight Frank, said top bids could come in at about $88.5 million to $95 million.

This works out to $650 to $700 per sq ft (psf) of gross floor area, almost double the $378 psf implied in the initial bid.

‘We think there will be keen interest for this site especially when tourist numbers are strong and hotel room occupancy healthy. The site is also well placed in an established hotel cluster comprising Studio M, Park Hotel Clarke Quay and The Gallery Hotel,’ he said.

Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, agreed that the tender would benefit from the current optimism in the hotel industry.

‘Tourism has been doing well and the number of business travellers and leisure seekers is expected to increase,’ he said.

This is the third hotel site to be put up for sale by the URA in as many months.

Two other sites, one at the corner of Robinson Road and Boon Tat Street and the other at the junction of Gopeng and Peck Seah streets, are up for public tender.

Meanwhile, a four-storey commercial building in Changi Road has been sold to Roxy-Pacific Holdings for $35.5 million.

The price for Everitt Building works out to $877 psf, according to a press release issued yesterday by CKS Property Consultants, which brokered the deal. The property has an existing net lettable area of about 40,468 sq ft.

‘Plans for additions and alterations are likely’ for the building, which is currently operating at only about 80 per cent efficiency, said CKS head of investment Derrick Tan.

Source: Straits Times, 24 Dec 2010

Freehold plot may get bids of $300m for residential, commercial development
THE iconic Lion City Hotel and the adjoining Hollywood Theatre site have been put up for sale and could be in line for redevelopment into swanky new homes and shops.

The 147,909 sq ft freehold plot, which has been launched for tender with a closing date of Jan 6, is expected to attract bids topping $300 million from developers.

Once sold, it is likely that the land will host retail shops or offices and more than 200 new homes – the first time a large project of more than 100 units has been developed in the area since Sims Residences and Vistaya View were completed in 2003.

Such a project will further boost the rejuvenation of the area and is in line with the Government’s plans for Paya Lebar Central to be developed into a ‘lively, pedestrian-friendly commercial hub with a distinct cultural identity’.

Including an estimated development charge of $77.8 million payable for the re-zoning on top of the projected price of $300 million, developers can expect to foot $753 per sq ft (psf) per plot ratio.

The site, located within 350m of Paya Lebar MRT Station, is zoned for hotel and commercial use in the 2008 Masterplan.

But the Urban Redevelopment Authority has granted approval for it to be redeveloped into a mix of residential and commercial developments up to a gross plot ratio of 3.39, according to joint marketing agents Landmark Property Advisers and Knight Frank.

The plot consists of 243,805 sq ft of residential gross floor area (GFA) and 264,119 sq ft of commercial GFA, which will allow for a shopping centre similar to that of Katong Mall and some 240 apartments of an average size of 1,000 sq ft, the marketing agents said.

The GFA, however, includes a substation site of about 2,048 sq ft currently owned by SP PowerAssets.

Mr Colin Tan, research and consultancy director of property firm Chesterton Suntec International, said the residential segment is likely to perform well since it is close to the MRT station. The long-term potential of the Paya Lebar area might also appeal to buyers, he added.

Paya Lebar Central is one of the three commercial hubs selected to provide alternative locations for businesses and to bring jobs closer to homes as part of the Urban Redevelopment Authority’s decentralisation strategy. The other two are Jurong Lake District and Kallang Riverside.

The Lion City Hotel was built by the late property magnate Wee Thiam Siew some 40 years ago and the Wee family has been operating it ever since.

The old Hollywood Theatre used to be the location of City Harvest Church, but it has since been leased to Sheng Siong supermarket.

With the site now being allowed to switch to residential and commercial uses, the family has decided to divest this asset as property development is not their core business, the statement from the marketing agents said.

‘We expect keen interest from developers as it is seldom Singapore has a freehold site in single ownership suitable for large-scale development being offered for sale,’ the marketing agents added.

Source: Straits Times, 2 Dec 2010

A HOTEL site in Tanjong Pagar, at the junction of Peck Seah Street and Gopeng Street, will be put up for sale by public tender in two weeks.

The Urban Redevelopment Authority said yesterday that an unnamed party has put in a bid of $94 million for the 0.23ha site, thereby triggering the tender process.

The 99-year leasehold site in the Central Business District is within walking distance of the Tanjong Pagar MRT station. It can yield a maximum gross floor area of about 208,992 sq ft and can be built up to 30 storeys.

A hotel on the site would do well mainly because there is a lack of quality four-star hotels in the CBD, said Mr Donald Han, managing director of real estate consultancy Cushman & Wakefield.

He expects bids to come in at between $650 and $750 per sq ft per plot ratio (psf ppr). The trigger bid was $450 psf ppr.

The Tanjong Pagar site has been on the Government’s reserve list since February 2008.

Under this list of development sites, a site will be put up for tender only after a developer commits to a bid that reaches a minimum level set by the Government.

Mr Han said that the business convention sector is recovering well and noted that the Amara Singapore Hotel, which is situated nearby, is also doing well.

URA said: ‘The successful sale and ongoing development of several new office high-rise residential and hotel sites in the area will further enhance the vibrancy and activities of the Tanjong Pagar commercial district.’

Separately, Asimont@Barker has been launched for collective sale at a reserve price of $68 million.

The 20-year-old, freehold low-rise condominium is situated off Barker Road near Anglo-Chinese School (Barker). It was first put up for collective sale in February 2008, several months before the global financial crisis broke out.

The owners then had set a reserve price of $75 million but did not manage to attract a single bid.

The site has an area of about 43,138 sq ft and with its new reserve price of $68 million, this works out to be about $1,175 psf ppr.

The marketing agent for the collective sale is Realtorhub Real Estate.

Source: Straits Times, 2 Nov 2010

Tender for reserve list plot triggered after minimum bid

THE Urban Redevelopment Authority (URA) will put a hotel plot in the Tanjong Pagar area on the reserve list for tender after a successful application from an unnamed developer that has agreed to bid a minimum price of about $94.05 million or $450 per square foot per plot ratio (psf ppr).

The 99-year leasehold plot, at Gopeng Street/Peck Seah Street, was made available for application through the reserve list system in February 2008.

The plot can generate about 330 hotel rooms and 31,215 sq ft gross floor area of commercial space, according to information listed in the second-half 2010 Government Land Sales Programme.

URA will launch the public tender for the site in about two weeks.

The land parcel is a stone’s throw from two earlier hotel sites sold by URA in 2007. One plot was sold for $123 million or $573 psf ppr to Carlton group, and the other was sold for $97.07 million or $562 psf ppr to Chng Gim Huat of CGH Group.

Cushman & Wakefield Singapore’s managing director Donald Han predicts the top bid for the latest plot could be in the $650-750 psf ppr range (or about $136 million to $157 million in terms of absolute bid prices).

URA in its release noted that the Tanjong Pagar area is home to several hotels which have been established to serve the business community and tourist visitors. These include business hotels like the Amara and M Hotel, as well as award-winning hotels such as Berjaya Hotel and The Scarlet.

‘The successful sale and on-going development of several new office, high-rise residential and hotel sites in the area will further enhance the vibrancy and activities of the Tanjong Pagar commercial district,’ it added.

Source: Business Times, 2 Nov 2010

THE freehold site occupied by Paramount Hotel and Paramount Shopping Centre is up for collective sale with the same asking price as that three years ago – $200 million.

Located near the popular Parkway Parade mall in the east, the plot boasts frontage along both Marine Parade and East Coast roads.

The ageing 229-room hotel and 95 shops that the land currently hosts are housed in a four-storey podium and an eight-storey tower block.

Marketing agent Jones Lang LaSalle said the 102,685 sq ft site – which the owners unsuccessfully tried to sell in 2007 – has a gross plot ratio of up to 3.0 and an indicative price of $200 million.

The firm said the land currently zoned for hotel use could be redeveloped into a hotel-cum-retail development, with a gross floor area of up to 308,056 sq ft and up to 460 hotel rooms.

Jones Lang LaSalle’s national director and head of commercial investments, Ms Quek Soh Hoon, said the site – located in an established residential area – can be converted to residential use, albeit at a lower gross plot ratio of 2.1.

She said it could take a high-rise tower with 205 residential apartments, assuming a unit size of 1,000 sq ft.

Assuming 60 per cent of the site is redeveloped into a hotel with the rest earmarked for commercial use, the vendors’ asking price for the land parcel would work out to $691 per sq ft (psf) per plot ratio.

This is inclusive of a development charge of about $12.8 million.

But if a potential buyer wants to build a condominium on the site, the asking price would work out to $1,113 psf, inclusive of a higher development charge of $40 million, said Ms Quek.

In this case, condo units may have to be sold at $1,900 to $2,000 psf – a new benchmark level for the area.

Singapore-based YTC Corporation owns Paramount Hotel as well as a few shop units, while the other shops are owned by different individuals.

YTC also owns Peninsula Excelsior Hotel in Coleman Street.

The tender closes on Nov 23.

Source: Straits Times, 14 Oct 2010

It is expected to manage a hotel of about 280 rooms in Asia Square Tower 2
(SINGAPORE) After an absence of about a decade, the Westin brand is expected to make a return to Singapore when a hotel with about 280 rooms opens in the top stack of floors of Asia Square Tower 2 in 2013.

Industry sources say that Starwood Hotels & Resorts has clinched the management contract to manage the hotel under the Westin brand.

The hotel will be located on the 32nd to 46th floors – sitting above 26 levels of offices. There will be retail space on the first two floors and carpark lots on the third to fifth floors.

The Asia Square project is being developed by private equity real estate investment advisory group MGPA. The first tower, which will be 43 storeys high, is slated for completion around the middle of next year and will comprise mostly offices, with retail and carparks on the lower floors.

Starwood unit Westin Hotels & Resorts used to manage the two landmark hotels in the Raffles City complex along Bras Basah Road from the time they opened in 1986 until the end of 2001, when the management contract expired.

The then Raffles Holdings’ hotel management arm, Raffles International, took over the running of the two hotels from January 2002.

The hotels are today known as Fairmont Singapore and Swissotel The Stamford and managed by Fairmont Raffles Hotels, following Raffles Holdings’ 2005 divestment of its hotels business to Colony Capital, which later merged that portfolio with Fairmont Hotels & Resorts’ assets.

Starwood, however, continues to have a presence in the Singapore market through a management contract for the St Regis Singapore at Tanglin Road, which opened in 2008. The property is owned by Singapore’s Hong Leong Group. Starwood will also manage under the W brand a hotel of about 240 rooms that is being developed by City Developments at Sentosa Cove. This hotel is slated to be ready in 2012.

Then, there is Sheraton Towers Singapore at Scotts Road, which operates under a franchise agreement with Starwood.

Leasing interest in the office space at Asia Square’s Tower 1 has been gathering momentum in recent months. Market sources suggest that over 40 per cent of the 1.26 million sq ft of net lettable office space in the 43-storey tower is at an advanced stage of negotiation or let. Besides Citigroup, which is expected to lease 250,000 sq ft of space, Google is said to be in talks to take two floors. US law firm White & Case will occupy a floor.

BT understands that Bank Sarasin will lease the 25th floor, while Swiss private bank Julius Baer has signed up for the top two floors. Julius Baer is said to have been advised by Colliers International. Jones Lang LaSalle is the exclusive marketing agent representing Asia Square’s developer MGPA.

Source: Business Times, 14 Oct 2010

(SINGAPORE) Paramount Hotel and Paramount Shopping Centre are up for sale again at an indicative price of $200 million through a public tender.
The freehold property in District 15 was last put on the market in May 2007 at the same price but did not sell.

Paramount Hotel and Paramount Shopping Centre (at 25 Marine Parade Road and 30 East Coast Road respectively) make up a 229-room hotel-and- shopping complex.

The 102,685 square foot site, which is zoned for hotel use, has a gross plot ratio of up to 3. The site can potentially be redeveloped into a hotel and retail development with a gross floor area (GFA) of up to 308,056 sq ft – subject to official approval and payment of development charge.

This could yield up to 460 hotel rooms, says marketing agent Jones Lang LaSalle (JLL). The site also has the potential for alternative uses such as condominium, a mix of hotel and residential or a mix of commercial and residential (subject to official approval), JLL says.

If a developer chooses to allocate 60 per cent of the maximum GFA for hotel use and the remaining 40 per cent for commercial use, an estimated development charge of $12.8 million will be payable. The price of the property will work out to $691 per sq ft per plot ratio (psf ppr).

However, if a developer builds a residential condominium with a 2.1 plot ratio, an estimated development charge of $40 million will be payable. The price of the property then works out to $1,113 psf ppr.

‘The hotel industry will continue to do well and hotels outside the CBD area, such as the subject site, will gain popularity as they offer competitive pricing, proximity and easy accessibility to town,’ said JLL’s head of commercial investments Quek Soh Hoon. ‘As the site is located in an established residential area, it could be redeveloped into a condominium development or a mixed development comprising hotel- cum-residential or commercial-cum-residential.’

The tender for the site closes at 3pm on Nov 23.

Source: Business Times, 14 Oct 2010

The sector’s strong growth has attracted the attention of global hotel players and investors

HOTEL prospects appeared mixed to analysts at the end of last year, with the economy avoiding a deep recession but still shrinking by 1.3 per cent.

In the face of the global recession, the hotel industry delivered sombre numbers, with average occupancies at 76 per cent and revenue per available room (RevPar) heading to a low of $148. It was a year that many in the hospitality industry would rather forget.

To many, the opening of the two billion-dollar integrated resorts (IRs) this year held the promise of economic growth. But there were still concerns of an impending oversupply with 5,800 new hotel rooms (equivalent to 17 per cent of existing stock) and whether there was enough demand to absorb them.

Available hotel rooms have jumped from 32,000 in 2008 to more than 41,000 currently. Even if demand could keep pace with supply, it might be at the expense of room rates, which were, at the time, among the cheapest in the Asia-Pacific. Could the IRs give the industry the fillip it needed? We are now well into 2010 and the tourism industry has had a stellar performance. Tourist arrivals, hotel room occupancy rates, RevPar, and average room rates showed double- digit improvements, on a monthly annualised basis.

There was a record number of visitors in the first seven months, hitting a record 1.095 million in July. This million-plus monthly trend is likely to continue for the rest of the year with the Formula One and Christmas light- up completing a traditionally strong finish to the Singapore Tourism Board’s busy calendar. This year, total tourist arrivals are expected to breach the 12-million mark, a rise of more than 23 per cent from 2009.

The industry is seeing a rebound in Asian business travel, with some hoteliers reporting significantly higher average daily rates and RevPar. In July, hotel occupancy hit a high of 90 per cent (up 10.2 per cent y-o-y), average room rates rose to $209 (up 19.9 per cent) and RevPar climbed to $188 (up 35.3 per cent). Hotel room revenue grew by $173 million (up 37.2 per cent). Twelve of the top 15 tourist markets for Singapore saw positive year-on-year growth.

Records were shattered over at Changi Airport which recorded its highest monthly traffic in July where 3.7 million passengers passed through the airport (up 16 per cent). The government also revised GDP growth upwards for the year, to 13- 15 per cent.

Singapore has successfully expanded the tourism and MICE (meetings, incentives, conferences, and exhibitions) market with the game-changing IRs, which attracted more leisure and business travellers. Visitor days (length of stay) of these travellers increased to 4.2 million days in July, up 21 per cent y-o-y.

Singapore’s hotel industry is among the two best performers in the Asia-Pacific. China is another market that enjoyed a meteoric rise y-o-y.

The strong growth of the sector here has attracted the attention of global hotel players, operators, and investors. Some existing hotel groups are seeking to roll out different tiers and brands in the island. Hotel investors and developers have jumped on the bandwagon by bidding for hotels and development sites.

Investment market

A total of three privately held hotels have changed hands since 2009. The latest sale of Ibis Hotel at $200 million or $371,000 per key and Park Regis Hotel (estimated at $730,000 per key) are a clear sign of growing investor appetite.

The Park Regis deal was 33 per cent higher than the $546,000 per key transaction for nearby Swissotel Merchant Court, bought by Malaysian-based TA Group last year in the depths of the financial crisis.

Government sites

Since June last year when a small hotel site in Short Street was triggered for tender and successfully sold, land prices have more than doubled. The latest sale at Havelock/Clemenceau Avenue showed the hunger for hotel projects and the serious liquidity in the market.

Typically, whenever a market is void of completed hotels to buy, investors will look to greenfield alternatives. The price achieved for the Havelock site was $812 per sq ft per plot ratio (ppr). This surpassed the previous record for a nearby site in Upper Pickering Street by just one per cent, with the latter site clinched by Hotel Plaza in August 2007.

The Havelock site attracted fierce competition with 13 big-name bidders. Interestingly, the all-time high for a government hotel site was $1,540 psf ppr for a 60-year leasehold project at Clifford Pier, now the home of Fullerton Bay Hotel. That deal was done in December 2006.

One attractive government site with a major hotel component is the former Capitol Theatre at Stamford Road. Seen as a prized location for an upscale hotel, the site attracted 10 bidders presenting 14 different concepts.

Some of the bidders’ concepts could have ultra luxury hotel operators such as Bulgari and Sofitel. Rumour has it that legendary names such as New York-based Waldorf and Armani may be associated with some of the bidders in their attempt to gain an edge in this ‘two envelope’ tender system.

In the months ahead, more sites are expected to be triggered for sale. These include development sites at Robertson Quay, Gopeng, and Bernam Streets with the jewel being the partially conserved site at the junction of Boon Tat Street and Robinson Road which currently houses the Ogilvy group. Most of these sites will attract potent partnerships between investors and hotel operators.

Prospects for the Singapore hotel market look promising. As an asset class, the sector has been re-rated upwards. The industry can expect further strengthening of room rates, RevPar, and occupancy in the short term – inducing new hotel investors into the playing field.

What was once a market to be avoided has transformed into a preferred play among hotel operators, private equity firms, and developers.

Investor confidence has returned and buyers are now more sure about underwriting RevPar growth for the future. Private equity funds are also likely to return, lured by prospects of higher returns, after largely disappearing from the hotel investment scene last year due to a lack of financing.

Strong economic growth in countries such as Singapore, China, and Australia has boosted the confidence of hotel investors, prompting listed groups such as Singapore Land, which owns the Pan Pacific hotel, Malaysia’s TA Group, and China Lodging Group to buy new hotels or raise fresh equity.

Sovereign wealth funds and the ultra rich tend to seek landmark properties that rarely come up for sale. Among them would be Singapore’s Raffles Hotel – bought recently by a Qatar Investment Authority unit.

For these buyers, there is a status factor associated with owning the hotels. A revival of investor interest also potentially benefits top hotel operators such as Accor, Starwood, and InterContinental as they seek to sell property assets and sign up new management contracts to expand their global footprint.

Lee Pei Ying is a research analyst and Donald Han is managing director, Cushman & Wakefield

Source: Business Times, 23, Sep 2010

But they’ll have to seek new markets to maintain growth, conference told

FRASERS Hospitality intends to open another nine service residences under its new Modena brand over the next 12 months, chief executive Choe Peng Sum said yesterday.

The group, which is the service residence unit of conglomerate Fraser and Neave, launched the brand in July 2009. It has since opened two developments, one each in Shanghai and Tianjin, under the Modena name.

And another nine properties – in Singapore, Kuala Lumpur, Hanoi and cities in China – will be launched within the next year as Frasers attempts to expand into the four-star boutique service residence segment, said Mr Choe, who was speaking at the Serviced Apartments Asia conference.

‘This is one market we want to get into very very strongly,’ he told delegates at the conference.

With Modena, Frasers will offer ‘four-star boutique hotel residences for extended stay’.

The properties will be less luxurious than those branded under the Frasers name and will consist of mainly studios and one-bedroom units.

Mr Choe also said the residences – which will cater to young executives and short-stay travellers – will have hotel licences instead of service apartment licences. This means that they can host travellers for shorter periods of stay.

Other service residence companies at the conference also said they were looking to expand.

CapitaLand’s serviced residence unit Ascott intends to use proceeds from the sale of 28 properties to its listed unit Ascott Residence Trust to expand, reiterated Ascott’s senior vice-president for business development and asset management Mark Chan during a panel discussion.

‘In the past year or so, we have been looking for opportunities to invest as well as divest,’ he said. Ascott sold the properties for $969.6 million to Ascott Residence Trust in August 2010.

The company is now on the lookout for opportunities to recycle capital and is searching for investments with good returns, Mr Chan added.

And on a more sober note, Eric Teng, chief executive officer of The Straits Trading Company’s property division, said that while occupancies and rates in Singapore’s service residence sector are booming right now, ‘we certainly don’t see this as sustainable in the long term’.

The large number of hotel land sites that are being released by the government for sale by tender as well as the upcoming supply of new hotel rooms will affect the market, he explained.

So service residence firms will have to reposition themselves and look for new markets to maintain growth, Mr Teng said.

Source: Business Times, 15 Sep 2010