Tender triggered for Victoria St hotel site

The buoyant tourism sector has spurred interest in a hotel site near Lavender MRT station. A tender for the 0.84ha site was triggered after a developer committed a minimum bid of $148.7 million.

This works out to $446 per sq ft (psf) per plot ratio (ppr) for the reserve list site at the junction of Jalan Sultan and Victoria Street.

Sites on the reserve list are put up for tender only if developers make an acceptable initial offer.

Experts say the tourism boom has led to a number of reserve list sites being triggered for sale in the past year, as investors hunt for well-located hotel sites.

For instance, a hotel site in Rangoon Road was triggered in February. It sold for $151 million in April to RB Capital group.

Analyst expects the top bid to come in at between $650 psf ppr and $700 psf ppr, or from $217 million to $233 million.

This estimate is based on the assumption that a three-star hotel with about 500 rooms is built.

However, the hefty overall quantum might limit the number of bidders to about six.

Developers will have a few options at hand as to their plans for the site, as it has been zoned for either hotel or commercial and residential use. However, both have a minimum hotel component.

If hotel use is chosen, at least 60 per cent of total gross floor area (GFA) must be for hotel rooms and hotel-related uses. The remainder can be used for commercial and/or residential purposes.

But opting for commercial and residential use still requires a minimum of 30 per cent of the GFA to be kept for hotel use. A minimum of 60 per cent must be for homes, while commercial use can take up a maximum of 10 per cent.

Source: The Straits Times – 2 August 2012