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(SINGAPORE) Australia's Lend Lease group has offered the highest-ever unit land price for a site in Singapore, with a top bid of $617.2 million for a 99-year leasehold commercial site just above Somerset MRT Station.

Hot site: Artist's impression of the upcoming retail centre, expected to be ready by December 2009, on the 78,702 sq ft site above Somerset MRT Station next to Specialists' Shopping Centre

The bid works out to a unit land price of $1,455 per square foot of potential gross floor area, which is higher than expected and underscores the bullish outlook for the Singapore property sector, especially among foreign investors.

Lend Lease, the developer of England's famous Bluewater mall in Kent, says it is confident of the fundamentals of the Singapore retail market. It plans an all-retail project - currently estimated to cost a total of about $900 million, including the land price - on the 78,702 sq ft Somerset Central site, which can be built up to 424,205 sq ft gross floor area (GFA).

'The mall is expected to be ready by December 2009,' Lend Lease Real Estate Investments Pte Ltd CEO Ooi Eng Peng told BT. 'It will focus on the mid-market fashion and food segment to suit that stretch of Orchard Road.'

In psf price terms, Lend Lease's bid is 34 per cent more than what Far East Organization paid for the nearby former Glutton's Square site in January. Far East had been widely tipped to be top bidder for the Somerset Central site.

Instead, Lend Lease pipped its $610 million or $1,438 psf per plot ratio (psf ppr) offer by a narrow 1.1 per cent margin yesterday. In fact, all five bids at yesterday's tender were above $1,100 psf ppr.

This reflects developers' confidence in Orchard Road and the retail tourism scene, according to CB Richard Ellis executive director Li Hiaw.

Colliers International's director for research and consultancy Tay Huey Ying agreed that this is despite the large amount of retail space coming up at the Marina Bay integrated resort.

Knight Frank executive director Danny Yeo said the strong bidding for the Somerset site also reflects its scarcity: 'This is the last goldmine on Orchard Road for mall developers.'

He estimates that Lend Lease's breakeven cost will be close to $3,000 psf. This means it would have to charge a gross average monthly rental of at least $18 psf to achieve a 6 per cent net property yield - the current level being sought by investors here.

Mr Yeo said that once the Somerset Central site is awarded, it will help liven up a stretch of Orchard Road which has traditionally played second fiddle to the area above Orchard MRT Station.

Next to Somerset Central site is OCBC's ageing Specialists' Shopping Centre and beside that is the former Glutton's Square site bagged by Far East.

OCBC and Far East already have an alliance to cooperate - involving either a massive retrofitting of Specialists' Centre or a total redevelopment of the more than 30-year-old complex along with the development of Far East's site. In fact, OCBC has taken a 10 per cent interest in Far East's Glutton's Square site. It remains to be seen if the duo will extend their cooperation to include Lend Lease, when it is awarded the Somerset Central site.

But even if this doesn't happen, Mr Yeo says there will be connectivity between the new developments on all three sites, which together will have a 300 metre frontage on Orchard Road - compared with the 250-metre stretch at Ngee Ann City. He also envisages a 'canal boulevard' at the rear of all three properties, built by partly decking over Stamford Canal and creating an open pedestrian mall lined with shops and outdoor refreshment areas.

'All this, plus the MRT location, means this stretch of Orchard Road is set to be a formidable alternative in terms of shopping experience to the Orchard/Paterson roads corner,' he said.

Apart from Lend Lease and Far East, the other three bidders in yesterday's state tender were: Frasers Centrepoint, which offered $1,320 psf ppr; a joint venture between CapitaLand and Lippo ($1,304 psf ppr); and a City Developments-AIG tie-up ($1,168 psf ppr).

In December last year, CapitaLand and Sun Hung Kai Properties clinched the Orchard Turn site above Orchard MRT Station for $1,020 psf ppr.

Lend Lease's Mr Ooi noted the Australian group is refocusing on Asia, especially for its core retail development business, starting with Singapore. Lend Lease recently teamed up with Lehman Brothers Real Estate Partners II and Eden Property Mauritius Investments to buy Paradiz Centre in Selegie Road for $138 million. The new investors plan to reposition the building.

Lend Lease's Asia Pacific Investment Company (II) fund bought Parkway Parade in 2000. The group is also providing retail design services for City Square mall along Kitchener Road and designed the original Jurong Point mall.