URA needs more time to finalise plans; consultants cite market conditions

THE Government has again postponed the release of new land – this time a hotel site in the Kallang River area – as the property market continues to flounder.

However, a historic site in North Bridge Road – which contains Singapore’s first cinema Capitol Theatre and two other heritage buildings – has been released on the reserve list sale system as planned.

This means that the site will be put up for tender only if developers indicate interest by committing to a minimum bid.

The 1.59ha hotel site at Kallang River – part of plans to transform the Kallang Riverside into a waterfront lifestyle precinct – was also scheduled to be made available on the reserve list this month.

But its release has now been deferred to next June, said the Urban Redevelopment Authority (URA) yesterday.

It said it needs more time to finalise the detailed planning and development conditions of the site as they relate to the broader plans for the area. The URA is working with other agencies on that, it said.

‘(The deferral) could be a reaction to the current poor market conditions,’ said Credo Real Estate’s executive director Tan Hong Boon.

The URA is probably taking advantage of the slower market to re-do its plans for the site, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

The two consultants said the site would be unlikely to attract interest even if it were made available now.

They are also pessimistic on prospects for the 1.46ha North Bridge Road site, boasting three historically and architecturally notable buildings: Capitol Theatre, Capitol Building and Stamford House.

‘It’s a lovely site as it is very central and next to the MRT station, but it won’t likely be triggered in the next six to nine months due to the credit crunch and poor property market outlook,’ Mr Tan said

Indeed, the 99-year leasehold site was to have been put up for sale directly this month but was transferred to the reserve list in late October, along with other sites, given economic uncertainties, the National Development Ministry had said.

At least 40 per cent of the North Bridge Road site’s gross floor area has to be set aside for hotel use to strengthen the hotel cluster in the area, URA said.

However, in the current market, this may not be attractive to developers, said Mr Mak. ‘There are already quite a number of hotels nearby.’

He said the site’s development will be highly complex and the concept needs to be handled with great care. The developer will need to find the right mix of various uses such as retail to ‘draw in the crowds and sustain their interest’, he said.

‘If done successfully, it can be an iconic development like the Fullerton Hotel. If it is not done successfully, its failure could be magnified due to its prominent location,’ said Mr Mak.

To ensure its vision of creating a distinctive development is met, the URA will be selling the land parcel via a ‘two-envelope’ system, where developers have to submit their concept proposals and tender prices in two separate stages, with concepts considered first. The URA will open the price envelope only for shortlisted concepts and pick the highest bid. This is time-consuming with extra costs and this may deter some developers, said Mr Mak.

Source : Straits Times – 19 Dec 2008

URA says release of the site will be deferred to June 2009

THE Urban Redevelopment Authority (URA) has deferred the release of a hotel site along Kallang River from this month to June 2009. The site was originally due to be made available for December 2008, as part of the government’s plans to transform the Kallang Riverside into a waterfront lifestyle precinct by the edge of the city.

‘URA is currently working with other agencies to finalise the detailed planning and development conditions of the Kallang River site to relate to the broader plans for Kallang Riverside and, as more time is needed, the release of this site at Kallang River on the reserve list will be deferred to June 2009,’ the agency said yesterday.

The deferment ‘makes sense’ as the site is unlikely to be triggered in the current market conditions even if it is made available, market watchers said.

URA also announced yesterday that a commercial site at the corner of Stamford Road and North Bridge Road is now open for application under the reserve list system.

The site contains three historical buildings – Capitol Theatre, Capitol Building and Stamford House – that are to be retained and restored for use. The Capitol Theatre, for one, is required to be restored into an arts or entertainment-related performance venue, said URA.

And to strengthen the hotel cluster in the area, the developer of the site will be required to develop a minimum of 40 per cent of the total gross floor area (GFA) for hotel use as well.

Analysts said that the site is unlikely to see interest anytime soon. ‘This is an irreplaceable site in terms of its location and heritage value but the timing may be inappropriate to realise its full potential,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

‘I don’t think the site will be triggered in the next six months,’ said Nicholas Mak, director of research and consultancy at Knight Frank.

Other than the poor economic outlook, potential bidders are also likely to be deterred by a few other factors, he said. For one, the conservation element might put off some developers. Others are likely to be deterred by the fact that some of the GFA has to be devoted to hotel use.

Developers are also not too keen on the ‘two envelope’ system, under which the site is being sold, Mr Mak said. Under such a system, the government first picks out developers whose concepts gel with its vision, then awards the site to the highest bidder.

Analysts also expressed concern that if the government keeps releasing sites on the reserve list, there could soon be too many sites on the list.

Source : Business Times – 19 Dec 2008