Far East-Sekisui JV tops bids for Woodlands office site

20140409-bt-far-east-woodlands-office-site-tender-pic [SINGAPORE] A joint venture between Far East Organization, its listed unit Far East Orchard and Sekisui House that topped a state tender for the first predominantly office site in Woodlands Regional Centre intends to build two 16-storey office towers featuring both large and small strata office units for sale as well as lease.

The project, located next to Causeway Point, will also have some retail space that the developers will probably retain for long-term investment. The top bid at yesterday's tender of nearly $634 million, or $906.29 per square foot of potential gross floor area, was just 2.1 per cent more than the next highest bid of $887.42 psf per plot ratio (psf ppr) from CapitaLand units Mahogany One and Mahogany Two.

However, the top bid was 17.6 per cent above the third highest bid of $770.49 psf ppr from a City Developments-Hong Leong Holdings tie-up and double the lowest bid of $440.28 psf ppr. The latter came from Sim Lian, which recently launched its Vision Exchange project in Jurong East where office units were recently sold at an average price of $2,150 psf.

Based on Far East-Sekisui's top bid, market watchers estimated its breakeven cost at about $1,800 psf.

Yesterday's tender attracted eight bids.

Jones Lang LaSalle national director Ong Teck Hui noted that the highest bid was about 10 per cent below the $1,009 psf ppr that Sim Lian paid for its Vision Exchange site in December 2012.

Both sites have 99-year leasehold tenure.

The lower bid yesterday is "reflective of the site's location in Woodlands, a relatively untested market for offices", said Mr Ong.

Agreeing, a market watcher said Jurong East is more advanced in terms of its development as a commercial hub compared with Woodlands. Another reason for the lower price for theWoodlands site is that it comes with more conditions. The Urban Redevelopment Authority (URA) has stipulated that at least 90 per cent, or 629,602 sq ft, of the 699,557 sq ft maximum gross floor area (GFA) for the site must be for offices - in line with the plan for Woodlands Regional Centre to be developed as a major employment centre in Singapore's northern area.

A further minimum 5,382 sq ft must be set aside for childcare centre use. The rest of the GFA can be for additional office or other complementary commercial uses such as retail, food and beverage and/or entertainment. Residential use is not allowed.

While strata subdivision is allowed for the office component, all the non-office uses (including the childcare centre) have to be held under a single strata lot and owned by a single entity.

Property consultants polled by BT when the site was launched last December generally predicted five to eight bids for the site, though they differed widely on their expectations of the top bid - from $500 psf ppr to $1,100 psf ppr.

Chia Siew Chuin, director at Colliers International, described the eight bids garnered as a "strong participation rate" signalling developers' optimism about the growth story for Woodlands Regional Centre. "Being the first site predominantly for office use in Woodlands, the site is expected to serve as the catalyst to kick-start the development of the Woodlands Regional Centre after all these years since decentralised regional centres were first conceptualised in 1991."

The site is a stone's throw from the interchange at Woodlands MRT Station, where the existing North- South line will meet the future Thomson line.

Moreover, says Far East Organization executive director (property services) Chng Kiong Huat, Woodlands will be linked to Johor Baru via a rapid transit link system in 2018.

Under the proposed scheme, the Far East-Sekisui project will have one basement level - for car parking and retail space and provide direct connectivity to the MRT station and Causeway Point.

Level 1 will also have some retail space in addition to the office lobby. Level 2 will feature green open space, a childcare centre and a link-bridge between the two towers. Offices will fill Levels 3 to 16.

The strata office units are likely to be launched for sale towards the year-end or early next year.

Source: Business Times, 9 Apr 2014