Little India hotel site draws $151m top bid

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On April 18, 2012
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Straits Times: Wed, Apr 18

TEN bidders have signalled their optimism about the thriving tourism sector by throwing their hats into the ring for a hotel site in Little India.

The top bid for the plot, at the corner of Rangoon and Farrer Park Station roads, was lodged by RB Capital Robertson City and RB Capital Farrer.

The consortium bid $151 million, or $1,078.80 per sq ft per plot ratio (psf ppr) for the 99-year leasehold site, which has an area of 3,096.1 sqm and is a stone’s throw away from Race Course Road. That is well above market forecasts.

Taipan Trustee, a trustee of Regalis Hotel Trust, was next with $141.1 million, or $1,008 psf ppr.

Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group, said the top bid ‘exceeded expectations’, considering that ‘the trigger price for the (reserve list) site was actually $56.5 million’.

‘Since the second bid is not far off from the first, which is only 7 per cent higher, the top two bidders actually saw the value of the site at this price.’

Race Course Development put in the lowest bid of $65.9 million or $470.8 psf ppr.

The 0.3ha reserve list site, which has a maximum permissible gross floor area of 13,004 sqm, can yield about 315 rooms. Part of the development can be built up to 20 storeys and another to six floors.

Credo Real Estate executive director Ong Teck Hui noted that the top bid for the city fringe site was comparable to previous bids for land within the city.

‘The site is very well located in an established hotel and shopping area and just next to Farrer Park MRT station. A hotel on this site is likely to do well catering to mass market travellers,’ said Mr Ong.

He also noted that the demand for hotel sites has been underpinned by the booming tourism industry.

‘Tourism receipts in 2011 rose to $22.2 billion with visitor arrivals hitting 13.2 million – substantial increases over the previous year’s,’ he noted.

Mr Lee said the hotel’s main target group would be medical tourists visiting Connexion, an upcoming health-care and hospitality complex in Farrer Park.

‘The hotel can tap the spillover demand from (there),’ he said.

Mr Nicholas Mak, head of research at SLP International Property Consultants, predicts from the top bid that the eventual hotel will be ‘business class’, with at least ‘three stars’.

‘It would likely cater to business travellers as well as medical tourists and their family members, because there is going to be a private hospital and medical suites with specialists in that area,’ he said, referring to Connexion.

He added that the considerable disparity between the top and last bids could simply be because the latter was ‘opportunistic’.

‘If (Race Course Development) had succeeded, it would have done so at a very good price.’

yjgan@sph.com.sg

Source: The Straits Times © Singapore Press Holdings Ltd.

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