90% of maximum GFA for the site must be for offices
At least 90 per cent or 629,602 sq ft of the 699,557 sq ft maximum gross floor area (GFA) for the site must be for offices. A further minimum 5,382 sq ft must be set aside for childcare centre use. The rest of the GFA can be for additional office or other complementary commercial uses such as retail, food and beverage and/or entertainment. Residential use is not allowed.
For the office component, strata subdivision is allowed which should increase the site's attraction to potential bidders keen on selling strata office units. All the non-office uses (including the childcare centre) have to be held under a single strata lot and owned by a single entity. The tender will close on April 8.
Property consultants generally expect five to eight bids for the site, with bidders drawn by the "first-mover advantage" the site offers in the area. However, they differed widely on their expectations of the winning bid for the site - from $500 per square foot per plot ratio (psf ppr) to $1,100 psf ppr.
Urban Redevelopment Authority (URA), which launched the tender for the site yesterday, said that the minimum 90 per cent office component is in line with the plan for Woodlands Regional Centre to be developed as a major employment centre in Singapore's northern area. An extensive pedestrian network has been planned to connect the sale site seamlessly to Causeway Point, the Woodlands Civic Centre, the existing Woodlands MRT Station and bus interchange, and the future Thomson Line MRT station in the vicinity.
The sale site, along Woodlands Square, comprises two larger land parcels of 85,729 sq ft (Plot 1) and 114,144 sq ft (Plot 2) and three smaller plots. One is for airspace to provide an elevated pedestrian link-bridge between the two bigger plots, while the other two are underground plots. Of these, one will provide an underground vehicular connection and carpark between Plots 1 and 2, while the other will provide an underground pedestrian link between Plot 1 and Causeway Point.
URA's spokeswoman said that the planning intention for the sale site is for a "quality and relatively more affordable office development which can meet the needs of SMEs and businesses that may not require prime office spaces in the city centre, but which would still benefit from proximity to a transport node". There are more than 500,000 residents in Woodlands and the neighbouring Yishun and Sembawang towns.
Knight Frank's head of investment and capital markets, Ian Loh, said: "When you're trying to encourage a regional centre to take off, rents have to be kept affordable. However, when you allow strata subdivision, rents tend to be higher as investors who have paid relatively high prices for their units will have a higher rent expectation to achieve a target yield."
He estimated the sale site's land price at possibly $700-780 psf ppr, translating to a breakeven cost of around $1,400-1,500 psf and potential selling price of $1,600-1,800 psf for the strata office units.
DTZ head of Singapore research Lee Lay Keng notes that although the Woodlands Square site's GFA is quite similar to that of the Venture Avenue site in Jurong Gateway sold to Sim Lian earlier this year at nearly $1,009 psf ppr, "the development of Woodlands as a regional commercial centre is still in its infancy and it is now still (better) known as an industrial location, rather than an office location". "Therefore, we expect a lower number of bids - about five to eight - compared with nine for the Venture Avenue site, and a top bid of about $800-1,000 psf ppr for the Woodlands site," said Ms Lee.
She reckoned that end users keen on buying strata units in the Woodlands Square project could include firms with operations in Malaysia, as Woodlands will be linked to Johor via MRT in future.
Elaine Chow, head of research at Chesterton Singapore, observed: "Currently, green field sites are aplenty in this northern town, but the pace of development is set to accelerate within the next five to 10 years."
The transport network in Woodlands Regional Centre will be boosted significantly and will have five MRT stations eventually.
Ms Chow expects the winning bid for the Woodlands Square sale site to range from $500 to $600 psf ppr, with the completed strata office units potentially selling at an average price of $1,300-1,500 psf.
CBRE Research associate director Desmond Sim expects the top bid to be around $1,100 psf ppr.
"Given that Woodlands Regional Centre will be the closest link to our northern neighbours via the Causeway and the future cross-border rail link, a commercial node will be well received by firms that may benefit from the cross-border proximity. In line with (Singapore's) concept of decentralisation, future commercial occupiers can also tap on the growing residential workforce close by, as well as the pool of qualifying workers across the Causeway," he added.
Source from Business Times