A MINIMUM 70 per cent office component has been stipulated for the commercial site next to Shaw Tower along Beach Road.
Small strata office or retail units will not be allowed in this 99-year leashold site, which has just been made available for applications by developers through the reserve list.
Market watchers estimate that its price will come in at more than S$1,000 per square foot per plot ratio (psf ppr) if it were to go on the market today.
The site is on the reserve list for the current second-half 2014 Government Land Sales Programme.
Sites on this list are launched for tender only upon successful application by a developer, accompanied by an undertaking to submit a minimum bid price that is acceptable to the state.
Located diagonally opposite the Duo project, the site includes the former Beach Road Police Station, a gazetted conservation building which has to be restored.
The land parcel predominantly comprises a 2.1-ha site which can be developed into a maximum gross floor area (GFA) of 950,592 sq ft. At least 70 per cent of this (665,424 sq ft) has to be set aside for office use.
The retail quantum can take up to 86,111 sq ft. There is also underground space of 12,648 sq ft for an underground pedestrian link to Duo, and to state land on Tan Quee Lan Street.
The Urban Redevelopment Authority (URA) on Wednesday, in releasing the sales conditions for the site, has stipulated that the whole development - excluding any GFA for hotel, serviced apartments or residential use - shall consist of not more than three strata lots.
The former police station conservation building must be held within one of these three lots.
Referring to the location of the site, a stone's throw from the South Beach project and Suntec City, the URA said in its statement:
"The land parcel is located on the fringe of the Singapore city centre and the intersection of two key development corridors along Beach Road and the Ophir-Rochor roads. Fronting Beach Road, Rochor Road and Nicoll Highway, the future development is envisaged to provide high-quality office space with complementary uses that can meet the needs of financial and business services.
"This new development will also reinforce the area's positioning as an attractive and vibrant mixed-use precinct within the city centre. ... The future development on the land parcel can reach a height of 45 storeys..."
Chestertons managing director Donald Han commented that the development of the site would support the rejuvenation of the Beach Road/Ophir Road vicinity, but expressed doubt over when this would happen:
"While the site is attractive, it will take a while for it to be triggered, mainly because you have a significant amount of office space within two large mixed development projects in the immediate vicinity - at South Beach and Duo.
"Potential bidders would be looking for these new surrounding commercial developments to reach fuller occupancy before they make an application for the release of the latest site.
"After setting aside the office and retail components, some potential bidders may be keen on putting in a hotel for the balance GFA.
" There is an attractive proposition for a new mid-scale hotel, if you look at the City Hall micromarket, where this land parcel is located."
Mr Han, noting that the retail component for the site would be only about half the size of the Shaw Leisure Gallery next door, suggested that if a larger retail quantum were to be allowed on the site, an earlier trigger date for the site could come to pass.
"Retail in the area would do well because of the sizeable supply of new office space coming up in the locale, in addition to providing a natural shopping linkage from Bugis Junction to Suntec City. Perhaps the authorities were concerned about traffic congestion, hence the decision to cap the retail quantum," he said.
JLL head of South-east Asia research Chua Yang Liang said: "Based on the conditions just released, we think the site is likely to command a land bid of some S$1,300 to S$1,500 psf ppr, depending on whether there is a residential component. We have excluded hospitality in our simulation for the sake of simplicity."
He reckons the site may be triggered for launch next year.
However, given its size - the land price alone could hit S$1.2 billion to S$1.4 billion - this land parcel is likely to attract the bigger players, possibly forming consortiums.
Dr Chua said: "It could draw some foreign players such as the larger Chinese developers that have been looking for opportunities in the Singapore commercial property market."
Source: Business Times, 27 Nov 2014