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21 November 2012

21st November, Wednesday




Jurong hotel site draws surprise top bid of $238m

Source: The Straits Times

A surprisingly spirited battle among 11 developers for a hotel site in Jurong Town Hall Road has resulted in a record bid being lodged.

Tamerton, a subsidiary of Genting Singapore, tendered $238.2 million for the 97,164.7 sq ft plot near Jurong Country Club. The hotel site has a 99-year lease and a maximum permissible gross floor area of 18,957 sq m.

That works out at $1,167 per sq ft per plot ratio - the highest bid received on a per sq ft basis for a hotel site here, noted Mr Lee Sze Teck, senior manager of training, research and consultancy at property firm Dennis Wee Group.

"The enthusiastic bidding shows developers' confidence in the development of Jurong East into the next major commercial hub outside the central business district (CBD)," Mr Lee wrote in a note Tuesday. "With the surrounding parcels of land along Jurong Town Hall Road and Jurong Gateway zoned commercial, there will be a critical mass of businesses operating in Jurong East."

Multinational or local companies with overseas arms that do not need a CBD address may set up operations in Jurong East, he added, noting that big names such as CapitaLand and the Ministry of National Development have committed to move to Jurong East in the next few years.

The Jurong Country Club is just behind the hotel site and there will be plenty of retail amenities such as JCube, Jem, Westgate, IMM and Big Box in Jurong East.

Another analyst said the response from bidders was "surprising", as the pricing and participation has surpassed that seen in recent tenders of hotel sites in or close to the city. "Contrary to earlier concerns that interest might be moderate as Jurong Gateway is still taking shape, hotel developers are obviously confident of demand for hotel rooms in this suburban hub," he noted Tuesday. "The long- term plans for Jurong Gateway do look very promising with a strong mix of office, retail, residential, hotel, entertainment and food and beverage uses."

The second highest bid, of $204.78 million, came jointly from Boo Han Holdings and Far East Orchard, with United Engineers Development next on $200.9 million. Other bidders included Roxy Hotels and Amara Hospitality Capital.


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Analysts say tougher for 60-year leasehold owners to apply for loans

Source: Channelnewsasia

Buyers of 60-year leasehold properties might find it a challenge to apply for loans.

While some banks are willing to lend, potential buyers may have to borrow less or pay off these loans faster.

But analysts said banks may have to re-think their home loan strategy as more of such sites make their way into the market.

The land at Jalan Jurong Kechil, which closed tender on 15 November, will be the first residential site to have a leasehold that is shorter than the usual 99 years.

A check with several Singapore banks revealed that they do offer mortgage loans for properties with a remaining lease of 60 years. Five banks that offer such loans include Citibank, UOB, HSBC, OCBC and DBS.

But analysts said buyers may end up paying higher monthly instalments or they have to borrow less.

Still, some analysts expect the situation to improve going forward.

“The Jalan Jurong Kechil site is an entire development, so the banks will definitely have to re-look at how their loan structure can be seeing that this is a new development with 60 years tenure, the bank will definitely be able to restructure something for buyers," one analyst said.

Experts said owners of such properties may face further challenges when they want to sell their homes later.

Private homes on the Jalan Jurong Kechil site are expected to be popular with long-term home buyers. But analysts say they may be less appealing to investors looking for a quick flip.


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JTC launches 3 sites zoned 'Business 2'

Source: Business Times

JTC Corporation has launched three sites for sale by public tender under the Industrial Government Land Sales programme.

One of the plots is at Buroh Street while the other two are at Tuas South Street 6. All three sites are zoned for Business 2 development, which allows for a wider range of uses in general.

The site at Buroh Street is 2.74 hectares (ha) in size, with a 30-year lease and a maximum permissible gross plot ratio of 2.5. The site can yield a "potentially substantial floor area" of over 737,000 sq ft.

Analysts estimate the top bids to come in at around $40 to $105 per sq ft per plot ratio (psf ppr), with five to nine bidders.  

The two other sites put up for tender Tuesday (plot 30 and plot 32) at Tuas South Street 6 are 0.86-ha land parcels with shorter leases of 22.5 years and a maximum permissible gross plot ratio of 1.0.

"These smaller plots with shorter tenure are targeted at industrialists who need to custom-build their own facilities," JTC said in a statement.

Analysts expect plot 30 to fetch around $60 to $90 psf ppr. Plot 30 lies in a better location at the intersection of three roads, they explained.

Plot 32 could fetch between $55 and $80 psf ppr.

The tender will close at 11am on 2 January.


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