$400m offer for Somerset site may spark bidding war
Wednesday, May 3, 2006
A BIDDING war looks likely for the prime Somerset Central site above the MRT station after an unnamed developer yesterday committed to pay at least $400 million for the land.
The offer means the site is now open to tender, and property experts expect other developers with deep pockets to enter the fray.
Somerset Central, which is next to Specialists’ Shopping Centre, is the third Orchard Road plot released for sale by the Government since last September as part of efforts to rejuvenate the retail strip.
The first was Orchard Turn, which sparked a remarkable bidding war eventually won by CapitaLand and Hong Kong partner Sun Hung Kai Properties with a whopping $1.38 billion.
Gluttons Square, on the other side of Specialists’ Shopping Centre, was the second. It was snapped up for $421.1 million by Far East Organisation, a firm also keen on Somerset Central.
Other interested parties may include Frasers Centrepoint, whose malls include nearby Centrepoint, Lippo Group, Malaysia’s IOI and Hong Kong’s Park Hotel Group. Frasers Centrepoint and Lippo both denied triggering the tender.
‘Naturally, everyone will point the finger at Far East because they won the other Somerset plot,’ said an industry source.
‘If they win this plot and work with Specialists’ Shopping Centre, they could link the sites and create a powerful stretch of shopping space.’
Whoever wins the 0.7ha Somerset Central site has to build a mall and an open-air shopping strip built over part of the Stamford Canal.
At least 60 per cent of the gross floor area of 424,205 sq ft must be for retail, food and beverage or entertainment. The rest can be for other commercial, hotel or residential use, said the Urban Redevelopment Authority.
Pricing will be the key. The trigger bid works out to $943 per sq ft of potential gross floor area, but experts said bids could come in above the $1,085 psf of potential gross floor area price for Gluttons Square. Orchard Turn was sold for $1,020 psf of potential gross floor area.
Jones Lang LaSalle’s head of investment sales, Mr Lui Seng Fatt, said the Somerset Central bids may be 5 to 8 per cent higher than Gluttons Square.
The developers will consider linkages to create a ‘formidable’ shopping mass comparable to Orchard Turn or Paragon, said Mr Lui.
‘We envisaged that Orchard Road shoppers will congregate around two important nodes - Orchard and Somerset MRT stations,’ he said.
On their own, the Somerset sites are too small to make a significant impact, consultants said.
Tenders will probably be called for in about two weeks and will close about three months after that.
Source : Straits Times - 3 May 2006
Loading ...