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The planning authorities have turned down an application for a medical centre development at the Eng Lok Mansion site on Napier Road, BT understands.

The freehold site was bought earlier this year by Napier Properties at a record land price of $1,218 psf per plot ratio.

Napier Properties, which counts former Parkway Holdings boss Tony Tan among its key shareholders, had paid the record price in hopes of redeveloping the site - which is next to Parkway’s Gleneagles Hospital - into an upscale medical centre.

Medical suites in prime districts make up some of the most expensive real estate in Singapore.

Units at the freehold Gleneagles Medical Centre, for example, are said to be going at up to $2,800 to $3,000 psf.

The Urban Redevelopment Authority (URA) turned down the medical centre proposal for the Eng Lok site as it is not in sync with the authorities’ planning intention for the site.

Under Master Plan 2003, the 70,810 sq ft site is zoned for residential use with a 1.6 plot ratio and 10-storey height limit.

However, Napier Properties is free to redevelop the Eng Lok site into a condominium or service apartments, according to advice given by the URA.

Mr Tan’s partner in the venture, Mark Wee of Penang’s Island Hospital group, said, when contacted by BT yesterday, that Napier Properties would appeal against the decision.

It would highlight the economic spin-offs that a high-end medical centre next to Gleneagles Hospital would have in attracting high-end medical visitors to Singapore. For such a facility to be successful, it would have to be located adjacent to the two private hospitals in the prime districts, namely Gleneagles and Mount Elizabeth, Mr Wee argued. ‘Eng Lok’s location is ideal for this purpose.’

But if the appeal fails, Mr Tan and Mr Wee will go with their back-up plan, as stated in March, of building a residential development. This could comprise some service apartments for lease and others for sale.

Or the owners could build an exclusive condo, tentatively named Embassy Row after the site’s proximity to foreign diplomatic missions, at an average price of over $2,000 psf.

Market watchers estimate that based on Napier Properties’ $1,218 psf ppr land price, the break even cost for an upmarket condo could be around $1,800 psf.

Napier Properties had planned to offer medical suites for sale and lease at its medical centre.

If it fails in its appeal, Napier Properties will be looking at a smaller profit than it has envisaged, as a condo would sell for less than medical suites.

Still, the turn of events is not expected to have wide repercussions on the collective sale market.

‘Yes, many owners when doing collective sales often peg their asking prices to the $1,218 psf ppr achieved for Eng Lok. But Eng Lok was a medical play. The big residential developers like Far East and City Developments did not top the list of bidders for Eng Lok,’ said one observer.

Agreeing, a property consultant said: ‘There aren’t that many Tony Tans around. The market will find its own level. Developers have to analyse the strengths and weaknesses of each site and decide the risk level they are willing to take.’

Source : Business Times - 28 Jun 2006