Business parks in demand as firms seek cheaper offices

Business parks in demand as firms seek cheaper offices

By Jessica Cheam

THE rapid rise of office rents in Singapore has spilled over to industrial properties such as business parks as tenants seek cheaper office options.
As a result, rents at industrial properties are rising, but not as fast as prime office space, which is in short supply, a new report has found.

The report, released by property consultancy Jones Lang LaSalle (JLL) yesterday, showed that rents in the central business district are a staggering 543 per cent above business park rents.

This has resulted in many companies relocating their back offices in the suburbs, said JLL Singapore’s head of industrial, Mr Tahlil Khan, who wrote the report.

And with no significant new supply of office space coming online until 2009 and 2010,

Mr Khan said there will be a spillover of demand from the office sector, which will lead to higher rents for business parks and high-tech buildings - a hybrid of office and factory space.

Already, monthly rents at the Eightrium @ Changi Business Park are up 20 per cent at $3.50 per sq ft. JTC Corporation’s posted rates for The Signature at the same business park have increased by about 8 per cent since the start of the year.

JLL’s head of industrial for Asia, Mr David Wilton, said nine companies - local and multi-national - have approached JLL for built-to-suit projects, as there is not enough supply of business parks in the current market.

He added that JTC’s anticipated sale of $1.6 billion worth of its assets, part of which will be pumped into a real estate investment trust (Reit), will change the market in terms of developing different types of industrial properties.

The Reit is expected to be listed by the second quarter of next year.

Source : Straits Times - 20 sept 2007

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Lehman, Japan firm invest $450m in new office block

Lehman, Japan firm invest $450m in new office block

Kajima-Lehman venture plans to have Robinson Rd project up by 2009
By Joyce Teo, Property Correspondent
FILLING A GAP: The new 15-storey block is targeted at financial institutions, which are fuelling demand for office space. — PHOTO: KAJIMA OVERSEAS ASIA & LEHMAN BROTHERS

CONSTRUCTION of a new $450 million office building on Robinson Road will be fast-tracked to cater to rising demand for office space amid a serious shortage in Singapore.
The 15-storey block should be up by mid-2009, about a year ahead of a large influx of office space expected in 2010.

Japanese construction company Kajima Overseas Asia and global investment bank Lehman Brothers said yesterday they will jointly invest $450 million in the project.

It will be built on the former Crosby House site and will target financial institutions, which are expanding in Singapore, fuelling demand for quality space. To be named 71 Robinson Road, it will offer 280,000 sq ft of Grade A office space.

The vacancy rate for prime Grade A space is now 1.65 per cent. Most of the vacancies are in the 1,000 sq ft to 3,000 sq ft bracket, said Jones Lang LaSalle’s regional director and head of markets, Mr Chris Archibold.

‘There will be continued competition for space in the next two to three years.’

71 Robinson Road is the first direct investment for Lehman Brothers’ Global Real Estate Group, which has US$7.3 billion (S$11.1 billion) invested in Asia. Its exposure in Asia will be kept at current levels over the next three years, said senior vice-president Blake Olafson.

He said Lehman is now moving the real estate group’s regional operating headquarters in South-east Asia from Bangkok to Singapore. Mr Olafson, who moved here from Bangkok two days ago, said he aims to double staff strength to 12.

Apart from the office building, Kajima has two other development projects in Singapore: a joint-venture condominium project on Balmoral Road and a residential one in Bishopswalk.

Lehman and Kajima bought the Robinson Road site last October from SingTel for $163.4 million, or about 60 per cent above the indicative price.

The site used to house an ageing seven-storey block, which had the Robinson Road post office as its anchor tenant. The sparkling new building that will take its place will have a totally different look.

Apart from high-quality specifications, it will boast an environmentally and ecologically friendly design by renowned German architect Christoph Ingenhoven.

Source : Straits Times - 20 sept 2007

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Ong Beng Seng urges Horizon Towers sellers to resolve sale

Ong Beng Seng urges Horizon Towers sellers to resolve sale

By Joyce Teo, Property Correspondent
NO SUIT: Mr Ong told the sellers that he has not sued anyone in 30 years of doing business, say sources. — BT FILE PHOTO

HOTEL Properties (HPL) chief Ong Beng Seng and his lawyers last night urged a group of Horizon Towers owners to cooperate in resolving the bungled $500 million collective sale of the condominium.
Mr Ong met the group at 4pm at Hilton Hotel yesterday - his first meeting with owners of the estate that he and his two partners are trying to buy.

HPL and partners are suing the Horizon Towers sellers for an alleged breach of contract and are seeking damages of more than $800 million.

The owners who met Mr Ong are anxious to avoid the potentially costly legal battle set to start next week. They had written to HPL earlier.

But a few others who had not written in turned up at the meeting and were eventually allowed in, sources said.

Lawyers from Allen & Gledhill, who represent the HPL-led consortium, were also present.

According to sources, Mr Ong told the Horizon Towers sellers that he has not sued anyone in 30 years of doing business.

He said that as HPL is a listed company and he has to protect shareholders, as well as his two partners, they added.

Mr Ong then told the sellers that they must have integrity, honour the contract and set a good example for their children.

Some sellers indicated at the meeting that they were keen to have Allen & Gledhill senior counsel K. Shanmugam participate at a major meeting to be held tonight.

The Horizon Towers sellers will have to decide on forming a sale committee and extending the sale deadline to allow the condominium’s sale to go through. They plan to vote at the meeting to be held at the Raffles Town Club.

The HPL-led consortium urged the sellers to vote sensibly at the meeting tonight.

A group of about 50 sellers have written to other sellers to express their concerns that the meeting tonight has been called without proper notice.

Source : Straits Times - 20 sept 2007

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Marina View plot draws record $2b bid

Marina View plot draws record $2b bid

It’s a vote of confidence in market, say property watchers, who had expected much lower bids
By Fiona Chan, Property Reporter

A PRIME plot in Marina View has drawn a top bid of $2.02 billion - the first time the price of state land here has crossed the $2 billion mark.
The whopping bid yesterday pipped two other close offers, which also came in at near-record levels.

Property experts say the bullish bids are a continuing vote of confidence in the property market and could serve as a shot in the arm for market activity, which has quietened somewhat in recent weeks.

‘It is exactly the confidence booster that the market needs to keep it going at this point in time,’ said Ms Tay Huey Ying, director of research and consultancy at Colliers International.

The $2.02 billion bid was submitted by Macquarie Global Property Advisers (MGPA), a private equity real estate fund management firm partly owned by Australia’s Macquarie Bank Group.

It is almost double what property watchers predicted the 1.02ha site would fetch in May, when its tender was first launched. The 99-year leasehold plot is located behind the One Shenton and Sail @ Marina Bay condominiums.
Indeed, all the three bids that came in before the site’s tender closed yesterday were ‘nearer the top band of the expected range’, said Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

CapitaLand and Mapletree put in a joint bid of $1.84 billion, while Malaysia’s IOI Group offered $1.6 billion.

The result of the tender, which is based solely on price, will be announced by the Government later.

Consultants said the turnout was quite good, given the site’s high price and ongoing global credit uncertainty.

‘In a market like this, I’m amazed that three bidders came out to offer between $1.6 billion and $2 billion,’ said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore. ‘It’s a bid that very few people can afford.’

The top bid works out to about $1,409 per sq ft (psf) of gross floor area, said Mr Li Hiaw Ho, executive director of CB Richard Ellis.

He added that the plot could provide 800,000 sq ft of net lettable office space.

A 40-storey building can be built on the site, but 70 per cent of its gross floor area must be used for offices. The rest can hold more offices, hotel rooms, homes or shops.

Experts said building homes or strata-titled office units could be a quick way for the winning bidder to recover most of its investment. Homes, for one, could fetch more than $2,500 psf, said Mr Li.

But MGPA appears to be favouring a full-office development. It said in a statement yesterday that the site ‘presents a rare opportunity to deve- lop a Grade A+ office building in the prime business district of Singapore, where strong demand coupled with limited supply makes now an ideal time for high quality office development’.

MGPA has been on an active buying spree here. In March, it agreed to buy Temasek Tower from CapitaLand for $1.04 billion.

Last month, it also bought 162 units of Allgreen Properties’ Cascadia condominium in Bukit Timah for a median price of $1,527 psf, sources said.
Source : Straits Times - 20 sept 2007

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71 Robinson Rd to be developed for $450m

71 Robinson Rd to be developed for $450m

Lehman Brothers- Kajima office project will be up by mid-2009
By UMA SHANKARI

US INVESTMENT bank Lehman Brothers and Japan-based Kajima Corporation said yesterday they will spend about $450 million developing their upcoming office project at 71 Robinson Road.

71 Robinson Road: The 280,000 sq ft building is aimed mainly at finance and banking companies
The 280,000 sq ft building - aimed mainly at finance and banking companies - will be up by mid-2009, beating the nearby Marina Bay Financial Centre (MBFC) by about six months.

The price includes the $163.4 million the partners paid last year for the plot, which was the site of SingTel’s Crosby House.

Lehman and construction and property conglomerate Kajima have equal stakes in the venture.

The 15-storey building in the Central Business District (CBD) is designed to meet growing demand for space from global banks and financial institutions that want to establish or expand regional operations. For example, it will have purpose-built trading floors.
In just the first half of this year, Prime Grade A office rents in the CBD rose 44% to $13.80 psf, JLL said.

The building will come to market ahead of MBFC, which will offer some 1.6 million sq ft of office space in 2010. MBFC has proved popular with financial institutions but is not fully leased yet.

‘There is no question there is an advantage in being quick to market,’ said Chris Archibold, regional director at Jones Lang LaSalle (JLL), which is marketing 71 Robinson Road. Space in the building will be leased at ‘market rate’, he said.

The project will benefit from rising office rents in the CBD amid a supply shortage.

JLL’s research shows Singapore will have about 2.3 million sq ft of new office space over the next three years - far short of the 5.1 million sq ft that will be needed, which will push rents up.

In just the first half of this year, Prime Grade A office rents in the CBD rose 44 per cent to $13.80 per square foot (psf), JLL said. It expects rents to hit $15.80 psf by year-end.

71 Robinson Road is Lehman’s first direct property investment in Singapore, said Blake Olafson, senior vice-president of the bank’s global real estate group.

Kajima, on the other hand, has been involved in more than 200 projects in Singapore and has two luxury residential projects for launch - one at Balmoral and the other at Bishopwalk.

Source : Business Times - 20 sept 2007

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Lehman moves global property unit to S’pore

Lehman moves global property unit to S’pore

Bank to jointly invest $450m with Kajima in CBD office building
By UMA SHANKARI
US investment bank Lehman Brothers has moved the base for the South-east Asian operations of its global real estate group from Bangkok to Singapore, it said yesterday.
It’s a deal: Mr Masao Hashimoto (left), vice-managing director of Kajima Overseas Asia, and Mr Olafson
The group has of late been beefing up its presence here, said Blake Olafson, senior vice-president of Lehman’s global real estate group.

Total staff count here has increased from about 30 to more than 200 now and the bank has also expanded its office space from half a floor at Suntec City to one-and-a-half floors, Mr Olafson said.

‘The missing link was the real estate guys,’ he said. ‘To run the business out of Singapore is very, very easy.’

The real estate unit intends to double its team to 12 members from 6-7 at present, he added.

Mr Olafson was speaking to reporters at a press conference yesterday, where Lehman announced that it will jointly invest some $450 million with Japan’s Kajima Corporation to build an office building in Singapore’s central business district (CBD). The partners have a 50:50 stake in the project.

The 15-storey building would be Lehman’s first direct property investment in Singapore. When completed in mid-2009, it will offer some 280,000 sq ft of office space.

Lehman’s real estate unit is looking for more investment opportunities in Singapore in both the residential and commercial sectors, Mr Olafson said.

The group also intends to grow its property investments in Malaysia and Indonesia out of Singapore.

So far, the unit has made about US$11 billion worth of direct property investments since 2001, but currently holds around US$7.3 billion in assets - having securitised or sold off the rest.

Going forward, the group will continue to maintain investments at around the same amount, Mr Olafson said.
Source : Business Times - 20 sept 2007

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Servcorp expands in S’pore as office market booms

Servcorp expands in S’pore as office market booms

By UMA SHANKARI

OFFICE space provider Servcorp is looking to expand in Singapore to take advantage of the booming office market here.

All in a day’s work: Servcorp’s office packages offer a dedicated receptionist and access to meeting rooms
Last year, the Australia-based company grew the office space in its Singapore portfolio by 35 per cent with the opening of a new location in Prudential Tower and the addition of another level in Suntec Tower Three.

And now, it is looking to add another five Servcorp floors over the next three to five years.

Servcorp, which celebrated its 20th year in Singapore yesterday, leases office space in bulk from landlords, then re-leases the space to companies and provides office support - providing what it calls a ’serviced office network’.

It also offers ‘virtual office packages’, where a client can take advantage of a prestigious address, get a dedicated receptionist who answers calls in a company’s name and gain access to boardrooms and meeting rooms.

The group has about 64,000 sq ft of space under lease in Singapore - out of more than 800,000 sq ft worldwide.

But to ride the booming office market here, it wants to grow its portfolio.

‘Demand has certainly increased and we are seeing companies being much more bullish about their entry to the Singapore and Asian markets,’ said Alf Moufarrige, Servcorp’s chief executive. ‘Instead of setting up with only one or two people, they are starting with six or more people - which, of course, increases the demand for space.’

Enquiries for space have climbed by about 30 per cent in the past year, he said.

Due to the strong demand, the rents charged by Servcorp have also gone up, in line with the rent the company has to pay to its own landlords.

‘The commercial space market is definitely booming in Singapore!’ said Mr Moufarrige. ‘When I arrived in Singapore in early 2005, the asking rental for traditional space in Six Battery Road was $5.50 per square foot (psf). This is now at record levels of $18.50 psf.’

But there is still room for expansion, the company feels, as there are many office developments that are slated to come up over the next three to five years.

Source : Business Times - 20 sept 2007

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The Aspine up for en bloc sale with $145m price tag

The Aspine up for en bloc sale with $145m price tag

This is lower than indicative price for nearby Pinetree Condo
By KALPANA RASHIWALA
THE owners of The Aspine at 5 Balmoral Road are teaming up to sell their homes collectively, with an asking price of $145 million or $1,966 psf per plot ratio - lower than the $2,100 psf ppr indicative price announced last week for nearby Pinetree Condo.
No development charge is payable for both sites.

Newman & Goh head of investment sales Jeffrey Goh, whose firm is marketing The Aspine, said: ‘In today’s market with the sub-prime mortgage fiasco still up in the air, one should not be too gung-ho in demanding exorbitant asking prices. Our asking price is a good fit for the developer but at the same time clears the hurdle of the owners’ minimum reserve price.’

Based on the $1,966 psf ppr unit land price, the breakeven cost for a new condo on the District 10 site off Stevens Road would be around $2,400 to $2,500 psf, market watchers reckon.

And if The Aspine achieves its asking price, owners of the existing 35 apartments in the development stand to receive sums ranging from $3.7 million to $4.3 million for each unit - about 80 per cent more than if they sold their units individually, acccording to Mr Goh.

Owners controlling more than 80 per cent of share values in The Aspine have signed the collective sale agreement. The development is about 15 years old.

The Aspine has a freehold land area of 46,104 sq ft land area and is designated for residential use with a 1.6 plot ratio (ratio of maximum potential gross floor area to land area) and 12-storey maximum height.

In March this year, Hong Leong Group paid $1,188 psf ppr, including DC, for One Balmoral. No 3 Balmoral Road, with a land area of about 23,820 sq ft, is understood to have changed hands a few months later at between $1,300 and $1,400 psf ppr.

The tender for The Aspine closes on Oct 17.

Source : Business Times - 20 sept 2007

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Ong Beng Seng meets owners to talk extension

Ong Beng Seng meets owners to talk extension

‘Hilton tea party’ shows no consensus among sellers
By MICHELLE QUAH
(SINGAPORE) Hotelier Ong Beng Seng took centre stage yesterday in a meeting with some 40 Horizon Towers owners to try to convince them of the need to extend the en bloc sale deadline.
Mr Ong spoke on how he had never sued anyone in his 30 years of doing business and how he hoped to find a more peaceful way of resolving the situation
The meeting came after repeated attempts by Mr Ong’s Hotel Properties Ltd (HPL) failed to secure the much-needed extension which would allow the collective sale to go through.

The event took place just the night before another meeting due to be held today at the Raffles Town Club - when all the owners of Horizon Towers will have to decide if they want to meet HPL’s demands.

The majority sellers of the Leonie Hill development - the 270 owners who agreed in February to sell Horizon Towers en bloc to HPL, Morgan Stanley Real Estate-managed funds and Qatar Investment Authority for $500 million - are being sued by the buyers.

The legal action follows the refusal by the Strata Titles Board (STB) to grant a collective sale order to Horizon Towers on the grounds that the application was defective. STB’s decision, coming just days ahead of the sale completion deadline, meant there was too little time left for a fresh application to be filed.

HPL and its partners want the sellers to extend the sale deadline, but the sellers have consistently refused to do so. The buyers have now sued the sellers - demanding that they extend the collective sale completion deadline or face the possibility of having to pay millions of dollars in damages each.

The aim of Mr Ong’s meeting with some 40 sellers yesterday - to which the media were not invited - was to find a way to head off further legal wranglings. He had hoped to convince this group of sellers - who are known to be keen for the collective sale agreement go through - of the need to extend the sale deadline.

Those who attended yesterday’s meeting at the Hilton, at HPL’s invitation, said Mr Ong spoke of how he had never sued anyone in his 30 years of doing business and how he hoped to find a more peaceful way of resolving the situation.

Attendees at yesterday’s ‘Hilton tea party’ - as one of the sellers dubbed the meeting - said that HPL’s lawyers, Allen & Gledhill, explained the history and legal implications of developments. Senior Counsel K Shanmugam told the would-be sellers that they had to decide if they wanted to elect a new sales committee and extend the sale deadline - and that they should hire lawyers to help them do so.

But while this group of sellers may be keen to extend the deadline, there are others who strongly object. One seller told BT: ‘It’s improper to put the threat of a lawsuit over us, to get us to extend the deadline, when we’ve already applied to the High Court to appeal the STB’s decision. We should just wait for the result of that appeal (to be heard on Sept 28) before thinking about an extension.’

Another vocal group of sellers, represented by Wong & Leow, also objected strongly to yesterday’s Hilton meeting. They said the meeting had been called without proper notice and could have the effect of rewriting the collective sale agreement. The divergent views between the now clearly splintered groups of sellers mean it will be tough for the owners to reach any satisfactory agreement easily.

Yet, that’s just what the sellers are aiming to do in today’s meeting at the Raffles Town Club. The gathering seeks to get all the majority sellers to vote on whether they should appoint a new sales committee and whether they should extend the deadline.

Horizon Towers is currently without a sales committee, after members of the last committee quit earlier this month - possibly owing to the strain of the situation.
Mr Ong spoke on how he had never sued anyone in his 30 years of doing business and how he hoped to find a more peaceful way of resolving the situation

Source : Business Times - 20 sept 2007

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Wall Street rallies after Fed sends strong signals

Wall Street rallies after Fed sends strong signals

Aggressive cut surprises investors but statement still wary of inflation
By ANDREW MARKS
THE US central bank sent a strong and decisive message to the world’s financial markets with a fifty basis point short term interest rate cut on Tuesday, that it intends to combat the economic effects at home of the global credit crunch on the US economy as well as to buttress the faltering confidence in the financial system worldwide.

What’s next: Wall Street has already turned to the next big question, and economists are again divided on whether a 50-point cut is sufficient, and what action the Fed will take, if any, in its next meet in October
In its accompanying statement, the Federal Open Market Committee said the action was needed to ‘help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time’.

The Fed’s decision to make its first rate cut in four years such a big one was reached unanimously by what had heretofor been a deeply divided interest rate policy making committee.

‘The FOMC looks like it is finally getting it,’ said Joel Naroff, president of Naroff Economic Advisors, reflecting the overwhelmingly positive sentiment on Wall Street. ‘After consistently underestimating the extent of the slowdown in housing and the implications of the sub-prime meltdown, the Committee made the right, aggressive move,’ he said. ‘I only hope this is the beginning and not just the end of its recession-fighting attitude.’

The move was clearly intended to inject confidence into fragile financial markets, Wall Street analysts said, and for one day at least, it worked in spades. Investors celebrated and the major US stock market indexes soared on the news of the fifty basis point reduction in both the federal funds rate and the discount rate which brings them down to 4.75 per cent and 5.25 per cent, respectively.

The Dow Jones Industrials registering a whopping 335-point or 2.5 per cent gain on the day. The stunning rally was even stronger on the broader S&P 500 index, which leaped by 43 points, or 2.92 per cent, as well as on the technology company-dominated Nasdaq Composite, where shares gained 2.7 per cent, a 70 point advance.

‘Wall Street got exactly what it was asking the Fed for,’ said Jim Awad, chairman of WP Stewart, a US$6 billion equity growth fund. ‘Traders and money managers have been screaming for a fifty point cut for the last two weeks, but I don’t think most investors expected the Fed to act as aggressively as it did, which is why you got such an overwhelmingly positive reaction on the stock markets. People were surprised, very happily surprised to see the Fed make such a big about-face and put the priority on ensuring liquidity in the capital markets over keeping inflation in check,’ he said.

Wall Street seemed intent on continuing the celebration for a second day, as stocks opened broadly higher following a big rally in Asia overnight. The Dow Jones industrials shot out of the gate at the opening bell, racing to a 86 point, 0.63 per cent gain in the first minutes of trading yesterday. The S&P 500 and Nasdaq Composite accelerated faster, advancing by 0.83 per cent and 0.71 per cent, respectively.

Tobias Levkovich, Citigroup’s chief investment strategist believes the market’s reaction to the Fed’s move will have more than short-term affects on share prices. ‘The decision to cut aggressively and the fairly clear language offered by the FOMC statement were meaningful salves for equity markets,’ he said, noting that daily moves of greater than 2 per cent, as occurred on Tuesday, are good indicators of strong future market performance as well. ‘This has been a bullish day on several levels,’ he said.

Still, Wall Street has already turned to its next big question: what’s next for the Fed?

‘The Fed noted that the action was ‘intended to forestall some of the adverse effects’ on the economy. Moreover, they also kept in the statements on upside inflation risks. We take these as a signal that they are not necessarily intending to reduce rates further which means that another rate reduction in October is not a certainty,’ observed David Rosenberg, chief US economist at Merrill Lynch.

Economists have already begun debating where the Fed goes from here and whether its fifty basis point cut is enough to keep the slumping US economy from an outright slump and a recession. Mr Rosenberg is in the camp of those favouring an additional cut, as is Mr Naroff, who said: ‘The Fed needs to keep taking necessary action to try to forestall a recession. One fifty basis point cut doesn’t necessarily do it for the economy. Even at 4.75 per cent, the Fed has not yet reached neutral. To stimulate growth, the funds rate should be cut to 4 per cent or less.’

Other economists, like Michael Darda, MKM Partners’ chief economist, said that chairman Ben Bernanke’s Fed should be loath to cut rates further, and must remain vigilant against the threat of inflation. ‘The inflation threat looms especially large because the dollar has been in decline against other major currencies. A declining dollar reduces consumers’ purchasing power and feeds inflation by making imports more expensive. The Fed has to be very careful not to provoke another bubble like the one that has led us to this crisis,’ he said.

Source : Business Times - 20 sept 2007

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MGPA puts in record $2.02b bid for office site

MGPA puts in record $2.02b bid for office site

All eyes are now on the plot next door, say consultants

By KALPANA RASHIWALA
(SINGAPORE) Macquarie Global Property Advisors (MGPA) is enlarging its footprint in the Singapore office market, putting in a record bid yesterday of $2.02 billion, or $1,409 psf of potential gross floor area, for a site slated for mostly office use.
Market watchers reckon MGPA’s all-in investment including land, construction costs and fees could be around $3 billion. The project could be completed around 2010.

The one-hectare plot, which is behind the One Shenton development and dubbed Marina View Parcel A, attracted just three bids in all. The 99-year leasehold plot can be developed into a maximum gross floor area (GFA) of 1.43 million sq ft, at least 70 per cent of which has to be set aside for offices.

Sources suggest Macquarie could be looking at an all-office scheme. Based on this, the sources estimate that Macquarie’s breakeven cost could be around $2,500 psf of net lettable area, and that it could be looking at exiting the investment at about $3,500 to $4,000 psf.

Said MGPA managing director Simon Treacy in a release yesterday evening: ‘The site presents a rare opportunity to develop a Grade A+ office building in the prime business district of Singapore where strong demand coupled with limited supply makes now an ideal time for high quality office development.’

Office industry watchers reckon that on a project-average basis, the development could fetch a monthly gross rent of around $12 per square foot and based on that, the net yield works out to 4.7 per cent on breakeven cost.

An all-office project could yield about 1.2 million sq ft net lettable area of offices. ‘An all-office configuration would provide opportunities to maximise the floor plate,’ said CB Richard Ellis executive director Li Hiaw Ho.

Macquarie’s bid was nearly 10 per cent higher than the second highest offer, believed to be from a joint venture between Mapletree Investments and CapitaLand ($1.8 billion, or $1,281 psf per plot ratio). The only other bid came from Malaysia’s IOI Group, at $1.6 billion or $1,128 psf ppr. Property consultants say that all eyes are now on the next-door, Marina View Land Parcel B, which is being offered for sale at an Urban Redevelopment Authority tender that will close on Nov 13. The 0.9-hectare plot can be developed into a maximum GFA of 1.22 million sq ft, of which at least 60 per cent has to be set aside for offices, and 25 per cent for hotel use.

MGPA’s bid yesterday of $2.02 billion is the highest ever for a state land sale in Singapore, pipping the total of $1.91 billion paid for the Marina Bay Financial Centre site in two phases, excluding the option fee.

The unit land price of $1,409 psf ppr is also said to be the highest for a primarily office site, surpassing the $1,104 psf ppr set in 1995 when Straits Steamship Land (now Keppel Land) bid for a site in the China Square area, which it later developed into what is today Prudential Tower.

It remains to be seen if MGPA will decide to team up with any partners for Marina View Land Parcel A. Assuming an all-in investment of $3 billion in developing this project, MGPA’s all-in investment in Singapore over the past year would cross $4 billion.

In March this year, an MGPA fund bought Temasek Tower for $1.04 billion or $1,550 psf of net lettable area. Late last year, MGPA made its maiden foray into Singapore’s real estate by buying 12 floors at Springleaf Tower on Anson Road for about $134 million, or $1,240 psf.
Source : Business Times - 20 sept 2007

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