UOL is top bidder for Eng Cheong Tower
7 Jan 05
Its offer for maiden collective sale of 99-year site crosses reserve price
By KALPANA RASHIWALA
UNITED Overseas Land has emerged as the top bidder for Eng Cheong Tower, with an offer above the reserve price, sources told BT.
A deal has yet to be inked but assuming the property fetches $46 million, the price works out to about $233 per square foot of potential gross floor area. That includes development charges (DC) and a premium to top up the site's lease to 99 years.
There are 65 years remaining on the leasehold site along North Bridge Road, and it could cost an estimated $8.5 million to top it back up to 99 years.
This is the first collective sale involving such a leasehold site.
The $5.3 million DC is needed to change the use of the site from industrial/warehouse to largely residential use.
While the development charge can be readily calculated from tables made public by the state, the upgrading of lease premium is an estimate to be finalised by the Singapore Land Authority (SLA) when a formal application is made for the upgrade.
However, prior to the launch of Eng Cheong Tower's collective sale, in-principle approval was obtained from SLA to upgrade the remaining tenure to a full 99-year leasehold residential development with retail and commercial use on the lower storeys, subject to conditions.
Outline planning permission has also been obtained from the Urban Redevelopment Authority for a new 24-storey commercial and residential development with a 6.36 plot ratio (the ratio of allowed gross floor area to land area) to be built on the 40,377 sq ft site.
This is the first time SLA has granted in-principle approval for lease upgrading, which allowed the owners of Eng Cheong Tower to go ahead with a collective sale. Usually SLA processes requests for lease upgrading only on formal application, on the merits of each case and the government's long-term plans for the area, among other factors.
Market watchers also note that typically, SLA may approve applications to upgrade leases of sites slated for redevelopment. A prominent example was when Shing Kwan House and the neighbouring ICB Building on Shenton Way were redeveloped into SGX Centre.
Some market watchers hope Eng Cheong's sale will pave the way for more collective sales of properties with 99-year leases.
However, this will hinge on the redevelopment potential of individual sites and whether there is a sufficiently attractive premium between the price owners can pocket through an en bloc deal compared to selling the units individually.
Another difficulty with doing a deal like Eng Cheong Tower with only in-principle approval for a lease top-up is that the actual premium is not certain when the en bloc sale is launched.
The $233 psf per plot ratio price based on UOL's bid price is close to the $245 psf ppr that CapitaLand paid in a state tender in 2003 for a nearby 99-year site next to Lavender MRT Station.
The residential component of a new project on the Eng Cheong site could break even at about $460 psf, say analysts. URA has stipulated that at least 20 per cent of the property must comprise commercial space.
With a full range of development expertise under its belt, UOL could develop a whole mix of uses, including service apartments, shops, offices and apartments for sale on the site.
UOL is also not new to the location. Listed subsidiary Hotel Plaza owns The Plaza on Beach Road, a 32-storey tower including shops, offices and 90 service apartments. The tower is next to Plaza Parkroyal hotel.
7 Jan 05
Its offer for maiden collective sale of 99-year site crosses reserve price
By KALPANA RASHIWALA
UNITED Overseas Land has emerged as the top bidder for Eng Cheong Tower, with an offer above the reserve price, sources told BT.
A deal has yet to be inked but assuming the property fetches $46 million, the price works out to about $233 per square foot of potential gross floor area. That includes development charges (DC) and a premium to top up the site's lease to 99 years.
There are 65 years remaining on the leasehold site along North Bridge Road, and it could cost an estimated $8.5 million to top it back up to 99 years.
This is the first collective sale involving such a leasehold site.
The $5.3 million DC is needed to change the use of the site from industrial/warehouse to largely residential use.
While the development charge can be readily calculated from tables made public by the state, the upgrading of lease premium is an estimate to be finalised by the Singapore Land Authority (SLA) when a formal application is made for the upgrade.
However, prior to the launch of Eng Cheong Tower's collective sale, in-principle approval was obtained from SLA to upgrade the remaining tenure to a full 99-year leasehold residential development with retail and commercial use on the lower storeys, subject to conditions.
Outline planning permission has also been obtained from the Urban Redevelopment Authority for a new 24-storey commercial and residential development with a 6.36 plot ratio (the ratio of allowed gross floor area to land area) to be built on the 40,377 sq ft site.
This is the first time SLA has granted in-principle approval for lease upgrading, which allowed the owners of Eng Cheong Tower to go ahead with a collective sale. Usually SLA processes requests for lease upgrading only on formal application, on the merits of each case and the government's long-term plans for the area, among other factors.
Market watchers also note that typically, SLA may approve applications to upgrade leases of sites slated for redevelopment. A prominent example was when Shing Kwan House and the neighbouring ICB Building on Shenton Way were redeveloped into SGX Centre.
Some market watchers hope Eng Cheong's sale will pave the way for more collective sales of properties with 99-year leases.
However, this will hinge on the redevelopment potential of individual sites and whether there is a sufficiently attractive premium between the price owners can pocket through an en bloc deal compared to selling the units individually.
Another difficulty with doing a deal like Eng Cheong Tower with only in-principle approval for a lease top-up is that the actual premium is not certain when the en bloc sale is launched.
The $233 psf per plot ratio price based on UOL's bid price is close to the $245 psf ppr that CapitaLand paid in a state tender in 2003 for a nearby 99-year site next to Lavender MRT Station.
The residential component of a new project on the Eng Cheong site could break even at about $460 psf, say analysts. URA has stipulated that at least 20 per cent of the property must comprise commercial space.
With a full range of development expertise under its belt, UOL could develop a whole mix of uses, including service apartments, shops, offices and apartments for sale on the site.
UOL is also not new to the location. Listed subsidiary Hotel Plaza owns The Plaza on Beach Road, a 32-storey tower including shops, offices and 90 service apartments. The tower is next to Plaza Parkroyal hotel.
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The new downtown at Marina Bay
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