Bullish bids for Beach Road site could boost optimism in property sector

This article is more than 12 months old

Singapore's land market has sprung to life and the property sector is about to get even busier in the months ahead, according to a report released yesterday.

Just how robust the sector is will get an early test on Thursday when tenders close for a prime commercial site in Beach Road, noted the Maybank Kim Eng report. It said a good result for the site will boost optimism across the sector and likely boost property shares, from Reits to developers.

The 99-year leasehold Beach Road plot, which includes the area's old police station, was put up for sale after a developer committed to bid at least $1.138 billion - or $1,197 per sq ft (psf) per plot ratio.

Maybank Kim Eng analyst Derrick Heng noted in the report that consultants are predicting a top bid of $1,262 to $1,400 psf. The plot will have a maximum permissible gross floor area of 950,592 sq ft. At least 70 per cent, or 665,424 sq ft, must be used for offices, with up to 32,292 sq ft for retail.

The report said bullish bids for the Beach Road site "could enhance the asset values of office landlords, by reflecting high replacement costs for their buildings". They would also be a sign of developers' confidence in the sector, which could in turn lift property shares.