A mixed development or “white” site in Central Boulevard is to go on sale nearly a decade after the sale of the last Marina Bay office site.
An unidentified developer triggered the site’s release for sale from the Government’s reserve list by committing to bid at least $1.536 billion at the tender, or about $1,010 per sq ft per plot ratio (psf ppr).
The news comes despite a tough office leasing market, with concerns over the 3.6 million sq ft of space in the central area due for completion this year and the next – across such projects as Guoco Tower, Duo Tower, Marina One and 5 Shenton Way.
Grade A Central Business District (CBD) rents fell 9.3 per cent from last year to $8.86 psf per month in the second quarter, while vacancy rates rose from 3.8 per cent to 4.2 per cent over the same period, according to Cushman & Wakefield.
“The fears around supply had put people off. But the commitments at nearby Marina One, which have been ramped up slightly, gave developers a bit more confidence,” said CBRE research head for Singapore and South-east Asia Desmond Sim.
Infrastructure and transport links are growing in the area with the recently completed Downtown Line and upcoming Thomson-East Coast Line. It means the tender for this site “re-establishes Marina Bay as a new central point for offices – an extension of Raffles Place”, Mr Sim added.
The 1.1ha site, between Asia Square and Marina Bay Suites, can be built up to 50 storeys high with a maximum gross floor area (GFA) of 1.52 million sq ft, of which at least about 71 per cent must be for offices.
Up to about 53,820 sq ft of GFA can be used for retail, and the rest for office, hotel, serviced apartment or residential purposes.
The site was on the reserve list for about a year. Prior to that, a 0.78ha white site at Marina View/Union Street was available since October 2011, but not triggered for sale. It was removed from the reserve list last year. Besides the ample supply deterring developers, the Marina View site was deemed inferior, partly as it was farther from Marina Bay.
“Developers have also become more confident with the sale of Asia Square Tower 1 in June,” said Ms Christine Li, research director at Cushman & Wakefield.
The tower went for $3.38 billion, the largest single-tower real estate deal in the Asia-Pacific. “It seems that trophy assets are still fetching good prices,” she added.
Office supply in the CBD is expected to taper off in 2018, with just 0.78 million sq ft available at Frasers Tower and Robinson Tower, said Ms Tay Huey Ying, JLL research head for Singapore.
No supply is anticipated after that, until the redeveloped CPF Building is completed around 2020 and The Park Mall by 2020 or 2021.
“The new supply of office space (from this site would) meet the expected tight supply of prime CBD office space then,” she said.
The tender could draw about four to eight bids, with developers forming consortiums, given the project size, said SLP International executive director Nicholas Mak. Bids may be about $1.67 billion to $1.83 billion, or about $1,100 to $1,200 psf ppr.
The Urban Redevelopment Authority will announce the launch of the site tender later this month.