|  Masterplan
    opportunities are few and far between.  Timing is everything as
    illustrated by Canary Wharf development in London; or the Expo site in
    Vancouver, Canada.   In Singapore  we've saved articles which
    document the development of this development.
    The tender for the 3.55-hectare waterfront site - about 6 1/2 times the
    size of a football field - closes on June 21 and six groups are expected to
    submit bids for the land, which is valued at $778 million.
 An unlisted company controlled by the
    Kwok family, which heads Sun Hung Kai Properties, is in a joint bid with
    South-east Asia's largest developer, CapitaLand Ltd, industry sources said.
    Both companies denied involvement. Sun Hung Kai Properties said that it had
    'no plan to invest in Singapore at the moment' while a CapitaLand spokesman
    said that it was 'not in partnership with Sun Hung Kai'. 'I'm surprised they are still denying
    this at this stage,' said one industry source. Hong Kong-listed Lippo, controlled by
    Indonesia's Riady family, said that it was leading a consortium to bid in
    Singapore's first government land sale for commercial use in three years. 'We are putting together a consortium,
    which we will lead,' said a Lippo spokesman. Adjacent to one of Singapore's planned
    casino resorts, the development will yield a total gross floor area of
    438,000 square metres, adding at least 10 per cent to the current office
    supply in the central business district. The reclaimed land, which has a 99-year
    lease, will also contain residential apartments and shops. Hong Kong's Cheung Kong (Holdings) Ltd,
    controlled by Asia's richest man, Li Ka-shing, has said that it would work
    on a bid with Hongkong Land and Keppel Land. City Developments and office landlord
    Singapore Land are said to be weighing bids as well. CityDev is reported to have been in talks
    to sell $500 million in assets to a listed property trust controlled by Mr
    Li to raise money to back its bid. The tender was triggered in March by
    Guocoland Ltd which offered an initial bid of $1,776 per square metre -
    lower than many analysts had expected. The site was on a government reserve
    list, created in 2001, which replaced regularly scheduled land sales. The
    government assigns secret minimum bid prices for plots on the list. When a
    bid level is breached, an auction is triggered. Winners of the bid will have a 'pretty
    tight grip on the prime office space market in the next 5-6 years' as no
    other major office development is in sight, said Moray Armstrong of property
    consultancy CB Richard Ellis. The tender is not expected to revitalise
    Singapore's property market, which is recovering tepidly. 'Given the risks of a mega-site like
    this, I do not expect the bids to be excessively high,' said Yu Lai Boon,
    managing director of Jones Lang LaSalle Singapore. Singapore office rents
    have climbed 11 per cent since October 2003 while those in rival financial
    centre Hong Kong have more than doubled in the same period, he said. Though office vacancy rates fell one
    percentage point in the first three months this year from the previous
    quarter, Singapore is fighting to retain multinational firms from being
    lured to cheaper regional business centres. 'Unlike Hong Kong, Singapore doesn't have
    proximity to China as leverage,' said Ong Wah Foon, head of research at
    property consultant DTZ Debenham Tie Leung. The last government land sale in the same
    area went to CityDev in 2002 for $1.07 billion, 38 per cent more than the
    initial bid. -
    Reuteurs    11  June 2005 
 Masterplan for Downtown Singapore A massive construction site for
    Singapore's new waterfront financial and business centre looks set to go on
    sale next year - to a single master developer. The successful bidder, as
    master developer, will have greater leeway to decide what types of buildings
    it wants to put up on the land. And the Government will
    consider a radical progressive payment scheme to offer flexibility to the
    company or consortium which takes on the project which will yield a built-up
    floor area of some 4.3 million sq ft. The proposed new downtown
    sits on 372 ha of reclaimed land around Marina Bay, next to the existing
    Central Business District, and is intended to meet office-space demand for
    the next 50 years. And if the appointed
    marketing consultant - Temasek Holdings' property arm Mapletree Investment -
    has its way, the site for sale might come with anchor tenants with their own
    design-and-build needs all ready to go. A progressive payment
    approach, rather than the usual full payment upfront for other government
    land sales, is just part of the flexible approach to developing this site,
    Minister of National Development Mah Bow Tan said at a press conference
    yesterday. Flexibility is needed
    because of the sheer size and, thus, the potential financial risk of
    developing the site, he said. So the developer may be
    allowed to pay just the land price of the first phase after award of the
    site, and an option fee for subsequent phases. If it does not exercise the
    option within the period, it will forfeit the option fee. It needs to pay
    the full land price for each phase only when it takes up that phase. The strategy to secure
    commitments from anchor tenants before tendering out the site is another way
    to hedge the risk of developing the site. Other things being
    considered by the various ministries and agencies involved in marketing the
    site include: Allowing the master
    developer a longer project completion period of possibly up to 15 years,
    rather than the usual eight to 10 years, and to develop the site in phases;
     
      Getting the Government
        to share the financial risk, perhaps by taking a stake; and,
      Relaxing the degree to
        which other building uses could be blended into what is meant to be
        primarily a business and financial hub - such as retail, food and
        beverage, and residential components.
        The exact size and
        location of the site, to be tendered out in the first half of next year
        'barring adverse economic shocks', will be decided on at the end of the
        year when the Urban Redevelopment Authority completes its review of the
        area's master plan. The National
        Development Ministry said that it will be a while before the first
        buildings are ready for occupation. Also, because of the longer project
        completion period allowed, development can be phased to match demand,
        allowing the property market to better absorb the supply of floor space. Flexible payment The developer may be allowed to pay just
    the land price of the first phase after award of the site, and an option fee
    for subsequent phases which will be forfeited if not exercised within the
    period. It needs to pay the full land price for
    each phase only when it takes up that phase.   -  
    By Soh Wen Lin     Singapore
    Straits Times    16 August 2002 Bleak future for rents, values at Raffles
    Place It is not exactly Sept 11 all over again,
    but the property market is still reeling from National Development Minister
    Mah Bow Tan's announcement of a new central business district - the New
    Downtown - last week. Since then, hundreds of millions of dollars might have
    been wiped off the values of offices in and near the Raffles Place CBD.
    Rentals, already hovering near record lows, now threaten to plumb even
    greater depths. And the fledgling REIT (real estate
    investment trust) business has been dealt a blow as well. Before Mr Mah's
    announcement, at least four large property firms were planning to launch
    office REITs. Investors will now demand higher yields - up by at least 100
    basis points (a percentage point) - for the higher risk. This might make it
    unfeasible for the firms to securitise their properties. On the face of it, Mr Mah's announcement
    is fairly mild. The government, he said, wants to attract more international
    financial institutions to Singapore. As these institutions require large,
    specially designed offices in pleasant surroundings and as the current CBD
    is too crowded, the project will jump-start the development of a new CBD on
    reclaimed land next to Raffles Place. A large plot of land will be sold to
    yield more than four million sq ft of space. Various government bodies, such
    as the Monetary Authority of Singapore (MAS), would help market the project. To minimise the impact on an office
    market already running desperately short of tenants, the project will be
    built over 10 to 15 years, so that an average of only 300,000 sq ft will
    come onstream each year. This is the official thinking. But consider the
    following factors: There is expected to be a net shrinkage
    of space occupied by financial institutions in Singapore. Even those that
    take up more space might do it only temporarily. A good example is United
    Overseas Bank, which is hubbing its regional credit card operations in
    Singapore, but said it may move to a cheaper location in the future.
     
      There are already three large office
        projects going up in the new CBD: one by a consortium comprising
        Hongkong Land, Li Ka-shing and Keppel Land; one by City Developments;
        and one by the National Trades Union Congress. With nearly three million
        sq ft of space (of which 200,000 sq ft will be taken by NTUC), these
        projects should be enough to house all the new financial institutions
        coming to Singapore in the next decade.
      As the government is keen to get the
        new CBD off the ground to compete with Shanghai and Hong Kong, its mega
        project might not be stretched out to 15 years, but just five years.
        This could throw more than 800,000 sq ft of space into the office market
        each year.
      Given that there are not enough new
        tenants to fill the space, poaching of existing tenants will be
        inevitable. Rentals in Raffles Place will fall and capital values will
        follow. This is bad news for office landlords
    from Singapore Land to CapitaLand and City Developments. There's more.
    Raffles Place sets the benchmark for the entire market segment. A fall in
    capital values there will ripple throughout Singapore, affecting suburban
    landlords from private developers to the Housing & Development Board. But the contagion may not stop there.
    Most of the banks' secured loans are backed by properties. Banks may demand
    borrowers to top up their loans to adjust for falling property values. At a
    time when cash is tight for everyone, this could be the worst possible news
    for office owners.   - 
    By  Lee Han Shih      Singapore
    Business Times      20 August
    2002UPDATE: If the new business and financial centre
    (BFC) is really important to the future of Singapore, should the government
    hesitate in pushing the project off the ground? Last Wednesday, National Development
    Minister Mah Bow Tan told developers that the sale of land in the new
    downtown - a huge tract adjacent to the existing Raffles Place central
    business district outside of Collyer Quay - may not happen in the first half
    of next year as announced earlier. Mr Mah was speaking at the annual dinner
    of the Real Estate Developers' Association of Singapore - and his message
    was a piece of rare good news for developers in recent times. The office sector is in the doldrums.
    Island-wide, there is a 15 per vacancy rate, with more and more companies
    giving up space or cutting down on it. Rents in prime areas have fallen 16
    per cent this year and it's hard to say when they will bottom. In the Rafles
    Place area alone, there is now five million sq ft of space without tenants. It was in this doom-and-gloom atmosphere
    that the government shocked the property market in August by announcing the
    BFC project. To be built in the new downtown, where
    there are already three large office projects under construction, BFC will
    be a behemoth of 4.3 million sq ft, or six to seven times the size of City
    Developments' top-of-the-line Republic Plaza. News of the project made developers' jaws
    drop - literally. 'It's crazy. We can't even rent out existing space and
    (the government) wants to add another four million sq ft to it?,' a
    developer lamented at the time. Knowing the negative market sentiment,
    the government took pains to explain that the project is vital to
    Singapore's future by providing a new cluster of buildings with large
    floor-plates to meet the needs of international financial institutions. In short, its message was 'no pain, no
    gain'. Pain, which could be suffered in the short term by developers losing
    tenants to BFC, would be far outweighed by the gain to the nation's
    financial industry in the long run. The message got through, and the BFC
    project was pushed in typical Singapore fashion - when something needs to be
    done, it will be done, regardless whether it's popular. BFC, in other words, is like raising the
    Goods & Services Tax or the delay in restoring Central Provident Fund
    contributions - a large number of people may hate it, but it will still
    happen because the government believes it's good for Singapore. Then last Thursday, Mr Mah said the
    government may delay selling land for BFC, hence delaying the project. Market speculation has it that it might
    have to do with the fact that consultant Mapletree Investments (a
    government-owned company staffed by former Urban Redevelopment Authority
    people) could not get a major commitment from the foreign banks. But even so, if BFC is indeed vital, then
    the government should not lose any time in getting it off the ground. If the
    land sale for the project is delayed because of economic conditions, it
    could be years before such conditions recover sufficiently for a sale to be
    launched - by which time other countries may have taken the lead from
    Singapore. And if the project isn't vital - and the
    lack of market response suggests that Singapore may be peddling a product
    with no customer - then the government may have to reconsider the whole
    project, rather than letting its huge shadow hang over all those who own
    offices in the CBD.   - By
    Lee Han Shih    
    Singapore
    Business Times     19 Nov 2002  
      
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