In the latest batched tender closing on Jan 15, bidding for the Club Street hotel plot was fairly aggressive with eight bids received. It was the first hotel site offered for sale in the government land sales (GLS) programme in a decade – not since the hotel site at Bukit Chermin Road in 2H2008, says Tricia Song, Colliers International head of research for Singapore.
The top bid submitted for the Club Street was $562.2 million and translated to $2,148.5 psf per plot ratio (psf ppr). “While it may seem particularly bold, we think the bidder -- Midtown Development, a subsidiary of Worldwide Hotel Group – would be working on an economy model,” notes Song. The group could potentially build an 800-room hotel on the site, thereby making more efficient use of the plot, she adds. The breakeven cost is estimated to be $800,000 per key, according to Song, which could generate a decent yield for the developer. The site allows for the development to include 4,800 sqm (51,667 sq ft) of commercial space to supplement hotel income.
The hotel site at Club Street which received eight bids at the close of the tender (Credit: URA)
Worldwide Hotel Group owns and manages six hotel brands in Singapore, namely Hotel Boss, V Hotel, Hotel Mi, Value Hotel, Venue Hotel and Hotel 81.It currently owns 38 hotels islandwide with a total of 6,500 rooms, and is considered Singapore’s leading tourist class hotel group.
Last November, Worldwide Hotel Group purchased the freehold Golden Wall Centre, off Rochor Canal Road near Little India in a collective sale for $276.2 million ($2,331 psf ppr). Golden Wall Centre, a strata-titled commercial complex has received approval for redevelopment into a hotel, says Giuliano Esposito, senior VP of strategic advisory & asset management at JLL Hotels & Hospitality.
The wide price gap of 12.4% between the bid from Worldwide Hotel Group’s Midtown Development and the second highest bidder – listed property firm UOL Group’s subsidiary United Venture Investments (No. 1) - reflects the confidence of the former in the location amid a general return of interest in the hotel sector, adds Song.
BIDS RECEIVED AT THE CLOSE OF THE TENDER FOR HOTEL SITE AT CLUB STREET
Credit: URA
The top bid by Midtown Development for the Club Street site is also 22% higher than the $118 million ($1,760 psf ppr) paid by privately-held property developer EL Development for the former Singtel Tower site on Hill Street last February. “The high premiums paid for the Club Street site are due to the scarcity of centrally located hotel development sites,” says JLL’s Esposito. “Robust hotel economic fundamental and a positive market outlook also helped push up bid prices.”