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KALPANA (SINGAPORE) The ageing Specialists' Shopping Centre along Orchard Road could finally make way for a new project under proposals to redevelop the site together with the former Glutton's Square plot next door, say sources.

Change in the air: Even if the building is not redeveloped, it will be refurbished to match new neighbours

BT understands that the proposals are still being discussed between OCBC Bank, which owns Specialists' Centre and Hotel Phoenix behind it, and Far East Organization, which clinched the former Glutton's Square site at a state tender in January.

'One possibility is OCBC could just contribute its Specialists' site into a joint venture that could develop this site together with Glutton's Square without having to put any cash for the construction. In exchange, the bank gets to hold a stake in the enlarged redevelopment scheme equivalent to the value of its site,' said a market observer.

Originally, OCBC had been talking about a need to merely refurbish Specialists' Centre - which is more than 30 years old - in conjunction with new developments at adjacent plots. Such an approach is favoured by some quarters in the bank who have some sentimental attachment to Specialists' Centre, BT understands. As well, a redevelopment scheme would at best see retention rather than an enhancement of the building's existing gross floor area going by current guidelines - which somewhat reduces the incentive to redevelop.

However, sources say that given that Specialists' Centre is more than 30 years old, its layout and efficiency (ratio of net lettable area to gross floor area) are dated, so it would still make sense to redevelop.

Sources say that given that Specialists' Centre's layout and efficiency are dated, it makes sense to redevelop.

Discussions between Far East and OCBC are likely to be finalised only after the award of another state site, dubbed Somerset Central, on the other side of Specialists' Centre. Part of this site, which is above Somerset MRT Station, is currently being used as a carpark. The tender for Somerset Central closes on Aug 16.

Far East is widely thought to have triggered the release of the Somerset Central plot, which was in the government's reserve list. However, it remains to be seen if it succeeds in clinching the 78,700 sq ft site when the state tender closes in about two months.

If it does, then the latest site will be included in a bigger redevelopment. If, however, another party clinches the plot, it remains to be seen how this affects an OCBC-Far East collaboration on their respective existing sites.

It also remains to be seen if OCBC and Far East agree on including Hotel Phoenix, which faces Somerset Road, in a redevelopment involving Specialists' Centre or if OCBC has to leave Hotel Phoenix standing and refurbish it separately.

Hotel Phoenix is safeguarded for hotel use by the authorities, which means that even if OCBC contributes the property for joint redevelopment with Specialists' Centre and the Glutton's Square site, it has to remain a hotel.

Some market watchers have also been speculating lately whether Far East will team up with Frasers Centrepoint to bid for the Somerest Central site given their recent successful partnership in clinching the Waterfront View residential site in Bedok.

OCBC holds an indirect interest of under 10 per cent in Frasers Centrepoint through the latter's listed parent, Fraser & Neave.

If Far East and Frasers Centrepoint team up again and win the Somerset Central site, it could make for an appropriate partnership involving OCBC, Frasers Centrepoint and Far East for the development of Glutton's Square, Somerset Central and Specialists' Centre - with or without Hotel Phoenix.

This will result in a sizeable retail project boasting prime linear frontage on Orchard Road and with an underground mall linked to Centrepoint Shopping Centre across the road.

A redevelopment of all three sites including Hotel Phoenix can yield a new project with a maximum gross floor area of about 1.3 million square feet based on current guidelines.

However, the developers may even be able to win rights for additional gross floor area from the Urban Redevelopment Authority under an incentive scheme to spur redevelopments on Orchard Road, say property analysts.

Retail market watchers say, however, that the completion of a new project may clash with the opening of Marina Bay Sands in 2009 which is expected to feature about one million sq ft of retail space and boast big new names like Saks Fifth Avenue.

Viewing things more positively, a retail market player says: 'While the jury is out on whether Marina Bay Sands integrated resort will overshadow Orchard Road as Singapore's prime tourist belt, it makes it all the more urgent for owners of ageing Orchard Road buildings like Specialists' Centre to wake up and do something - fast.'