A plot of land along Beach Road has been sold for S$1.62 billion to a consortium comprising subsidiaries of property developer Guocoland.
The winning bid translates to about S$1,706 per square foot per plot ratio.
There were five bids and other bidders included Kingsford Hurray Development and Japura Development, with Far East Organization claiming the lowest bid of about S$1.29 billion.
This two-hectare site will have a maximum permissible gross floor area of 950,592 sq ft. At least 70 per cent of the 99-year leasehold parcel must be used for office spaces, the Urban Redevelopment Authority said.
The remaining can be developed for additional office, retail, hotel, serviced apartment and residential uses.
The former Beach Road Police Station sits on the site and the developer is expected to conserve and restore the building. The developer is also required to build an underground pedestrian link to the nearby Bugis MRT station.
Mr Nicholas Mak, executive director of ZACD Group, said that the bullish bids are justified, citing the rents of the premium offices along Beach Road.
“The top bid today can be considered very bullish as it is 59.7 per cent higher than the unit price of the land parcel that was acquired by CDL, Istithmar and El-Ad Group in September 2007 at $1,068.62 psf ppr. That site has been developed into South Beach Tower.
“The bids reflect the developer's very strong confidence in the Singapore office market in the next four to five years. Probably when this new development is ready for use in 2020, the developers will expect the Singapore office market to be well into its recovery phase."
Mr Desmond Sim, head of research at CBRE Singapore and Southeast Asia, agreed with Mr Mak’s outlook on the office sector.