Wednesday, November 22, 2006
[RealEdge] BT : Hong Leong makes $45.8m top bid for Mohd Sultan site
| Published November 22, 2006  | |
| PROPERTY MATTERS | |
| Hong Leong makes $45.8m top bid for Mohd Sultan site
By ARTHUR SIM
THE Hong Leong Group has emerged as the highest bidder for a hotel site in Mohamed Sultan Road. Its bid of $45.8 million is about $10 million or 30 per cent more than the second highest, made by Park Hotel Group. Hong Leong's offer works out to about $520 psf per plot ratio, 11 per cent more than what Park Hotel Group paid for a nearby hotel site in Unity Street in August. Hong Leong Group spokesman Gerry de Silva said that it intends to develop a contemporary 'limited service hotel' with about 350 to 400 rooms under its Millennium & Copthorne Hotels (M&C) brand. 'This will be a new market segment that M&C would be looking to satisfy.' On the bullish bid, David Ling, managing director of hospitality consultancy HVS International, said that it 'signalled confidence in the hotel industry' here. He highlighted that room rates had increased by 15-20 per cent this year already and that next year is likely to see increases of 10-15 per cent. He added that if the Urban Redevelopment Authority were to release larger hotel sites, these would probably be 'snapped up by the big boys'. One outcome of rising prices is that smaller players have been left out. Hotel 81-linked Cityview Development emerged as the third highest bidder, at $34.1 million. Six bids were received in total and the tender award will be made after the bids have been evaluated. Mr Ling said that while Hong Leong might have offered a high price because it expects room rates to go up, it could also suggest that it expects lower hotel investment yields. Li Hiaw Ho, executive director at CB Richard Ellis Research, believes the high bid by Hong Leong suggests that the future hotel could be destined for the group's real-estate investment trust, which is called City Developments Limited Hospitality Trusts. Mr Li said that the high price was not unexpected as hotel occupancy rates rose from 83.5 per cent in the first nine months of 2005 to 84.3 per cent in the same period in 2006. |
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