New Singapore landmark

The latest tender exercise for a prime plot of commercial land in downtown Singapore has set a benchmark of sorts.

The Beach Road site was clinched by a consortium of the Singapore Kwek family's City Developments and Middle Eastern partners -- Istithmar Beach Road Fze and Elad Group. The new project, called South Beach, on the 3.5 hectare site will house two towers, 45 storeys and 42 storeys tall, plus the original conserved military buildings of the old Beach Road Camp which will be restored. The project will boast premium office space, two hotels, shops and city residences, according to reports.

First, as correctly pointed out by the press, the winning bid of $1.7 billion was not the highest bid. Somebody put in a higher bid in excess of $500 million but the CityDev consortium's design and eco-friendly features was more acceptable to the Singapore government.

Kudos to the Singapore government for accepting a lower bid for the sake of aesthetics and environmentally friendly features. It's quite rare for the government to accept a lower bid although there is a clause in the government tender document which states that it is not obliged to accept the highest bid for various reasons.

But I don't think any newspaper reports gave a comparison for the winning bid, which works out to be S$1,069 per square foot of potential gross floor area. If I remember correctly, the Beach Road site is priced higher than the winning bid of S$1,020 psf per plot ratio for the Orchard Turn commercial site, which is seen to be a better location in Singapore. The Orchard Turn site was clinched by Singapore's CapitaLand and Hong Kong's Sun Hung Kai two years ago.

Of course, the higher price is a reflection of the bullish sentiment in the property market in the last two years. Another argument could be that the Beach Road site is just as good as the Orchard Turn property, which sits directly above the Orchard MRT station. This is because South Beach is located directly opposite the grand Raffles Hotel although it is on the fringe of the prime business district, Raffles Place.

What's next? Higher office and retail rentals but that's another story!

S'pore's bubbly property market, part 3

Singapore property giant Kwek Leng Beng recently made the most bullish forecast for the Singapore property market so far, according to a Bloomberg interview. He's second from right in the larger pix that was published in local newspapers last year. Leng Beng stood next to famous architect Moshe Safdie (with moustache) in the winning bid for Marina Bay integrated resort and casino project, which will be developed by Sheldon Adelson of Las Vegas Sands. Leng Beng is on the left in the inset with younger brother Leng Joo. Notice how Leng Beng has an expressive way with his hand! :-)

But Leng Beng's prediction is plausible. He is one of the most astute readers of the local property market. He and his late father Hong Png of the Singapore Hong Leong empire have had an uncanny ability in reading the Singapore property market. They got so many cycles correct, including the latest bull run by Kwek junior.

And while everyone wrote off Las Vegas Sands in its bid for the Marina Bay integrated resort site, Leng Beng was the sole public backer of the American developer. Er, the other backer was dad, who correctly predicted the winners of the Marina Bay and Sentosa integrated resort and casino tender exercises.