URA modifies dual-envelope process for two GLS sites
By Timothy Tay
/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - A white site at Kampong Bugis and a hotel site at River Valley Road have been released for sale under the 2H2019 Government Land Sales (GLS) programme. Both sites are under the Reserve List.
The concept and price revenue tender approach will be adopted for both land sales. This means tenderers submit concept proposals and tender prices separately, and only successful concept proposals will be evaluated based on the prices.
However, URA will modify the dual-envelop approach for these two sites. Specifically, a tenderer with a shortlisted concept proposal could be offered the option to top up its bid price to match the highest bid price among the shortlisted concept proposals. This option will be offered selectively to only one or two “exceptionally outstanding” proposals, says URA.
The 8.2 ha site at Kampong Bugis is the largest GLS white site the government has made available for sale in terms of site area (Picture: URA)
“This is to strongly incentivise tenderers to draw up exceptional concept proposals, as they would have a greater chance of securing the tender while achieving the best possible development outcomes,” URA adds.
According to Nicholas Mak, head of research and consultancy at ERA Realty, this new approach may not generate URA’s desired outcome. “If a bidder suspects that his concept may be good enough to pass the first round but may not be the most outstanding concept, he may choose to submit an aggressive land price to increase his chances of winning the tender. Such an aggressive [price] bid may also discourage the other bidder with the most outstanding concept from topping up his bid.”
As a result, the bidder with the highest bid but not the most outstanding concept would still be awarded the tender. But Mak notes that “from the perspective of the [government], they could potentially have the best of both worlds. They could have the most outstanding concept and still sell the land parcel at the highest price.”
Of the two GLS sites, the white site at Kampong Bugis is located along Kallang Road and features over 1.1km of river frontage. It is close to the city centre and three MRT stations – Kallang, Lavender, and Bendemeer. This waterfront residential precinct will be car-lite, community-centric, and sustainable. It will also be released for sale to a master developer.
The white site at Kampong Bugis is under the Reserve List of the 2H2019 Government Land Sales programme. (Picture: Albert Chua/The Edge Singapore)
The 8.2 ha site at Kampong Bugis can accommodate a maximum gross floor area (GFA) of 4.2 million sq ft. This includes a maximum of 4,000 residential units and up to 538,195 sq ft of non-residential floor space for retail, serviced apartments, and offices. Other uses include elder care or a senior activity centre, as well as sports and recreational facilities.
This is the largest GLS white site the government has made available for sale in terms of site area, says Mak. If successfully triggered for sale, it will also be the first white site sold in four years. The last white site at Central Boulevard was sold to IOI Properties in November 2016, for a record land bid of $2.57 billion ($1,689 psf).
According to Mak, the new white site will be an iconic project to rejuvenate the Kallang neighbourhood and transform the area into an attractive waterfront residential and commercial hub.
However, it is unlikely to be triggered for tender in the next 12 months due to the complexity and large amount of capital required for the development, he says, adding that the land price could range between $6 billion and $7 billion. According to URA, the entire development of the site is expected to be completed over 11 to 13 years.
The developers will need experience in developing integrated projects and the financial capability to sustain the development, says Mak. It is likely that some of the bidders would include overseas developers who have experience in large-scale urban planning projects, or real estate funds because of the large financial commitments, he adds.
URA has also introduced a flexible payment scheme and a phased development approach which it says will allow the developer to phase the development of the site in tandem with market demand and presents lower upfront costs and risks.
The developer only pays upfront the land that will be developed under the first phase, which must comprise at least 731,945 sq ft of residential floor space. In addition, the master developer will pay a non-refundable option for the right to buy the rest of the land parcel.
The hotel site on River Valley is expected to accompodate 530 rooms. (Picture: URA)
Meanwhile, the hotel site at the junction of River Valley Road and Clemenceau Avenue spans 1.02 ha and is located above Fort Canning MRT Station. The new development is envisioned to be a distinctive waterfront landmark that will offer connections and visitor experiences between Fort Canning Park and the Singapore River.
The site has a maximum GFA of 308,558 sq ft and is expected to accommodate close to 530 hotel rooms. The site has three height restrictions: a low-rise zone of four floors, a mid-rise zone of seven floors, and a high-rise zone of 16 floors.
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