|
On the block: With all-in redevelopment cost at about $1.4b, UIC Building would appeal mostly to big players |
This works out to a unit land price of about $1,150 per square foot of potential gross floor area, inclusive of a total payment of about $204.2 million that the successful bidder will have to make to the State for development charges and to top up the site's lease to the original term of 99 years.
As the building was completed in the early 1970s, the site has a run of about 62 years.
Taking into account construction costs, fees and interest expenses, the all-in development cost could come to about $1.4 billion, say market watchers, which means that this site would appeal mostly to big players.
Mainboard-listed United Industrial Corporation, which owns 78.8 per cent of share values in the property, is expected to bid for the site. The minority owners in the building include Air India, Lee Tat, Comcraft, Korea's Woori Bank and Shankar's Emporium group.
'We are confident of getting approval from owners controlling at least 80 per cent of share values, once we get our price - in excess of $830 million,' says CBRE executive director (investment properties) Jeremy Lake, whose firm is marketing UIC Building.
'This is the largest collective sale in dollar terms ever launched. It is also the first major commercial collective sale,' he adds.
Under Master Plan 2003, the 72,960 sq ft site is zoned for commercial use with an 11.2+ plot ratio and qualifies for a 10 per cent bonus plot ratio. The site has a 35-storey height limit. The maximum potential gross floor area (GFA) of 898,867.2 sq ft is about 70 per cent more than the existing GFA.
Industry observers say that the successful bidder of UIC Building is likely to consider a residential development, given that City Developments has been given approval by the Urban Redevelopment Authority (URA) to redevelop its nearby No 1 Shenton Way site into a residential project. Known as One Shenton, it is slated for launch soon.
This is especially so given last week's strong sellout at the nearby Marina Bay Residences.
'Of course, given that office rentals and values are also appreciating strongly, and the shortage of office space building up on the island, a new office development also makes sense,' said a seasoned market watcher.
CBRE said that any change of use to residential or other uses such as hotel or service apartments is subject to approval from the relevant authorities.
Based on the guide price indicated by CBRE, UIC's owners will receive about $2,000 psf on their respective strata floor area in the building. This is about three times the $650 psf achieved for the last strata sale in the building - a mid-floor unit of 8,934 sq ft sold in October last year.
Meanwhile, another collective sale is also in the works on the same side of the street - at Shenton House, sandwiched between No 1 Shenton Way and UIC Building.
This means that this entire strip in the 'old CBD' is headed for redevelopment and rejuvenation. The owners of Shenton House recently held a 'beauty parade' to pick a marketing agent. The building is said to have more than 170 owners.
BT reported a year ago that URA and the Land Transport Authority (LTA) are looking into a possible future extension of McCallum Street which will involve a minor road being created between the Shenton House and UIC Building development sites, and this will connect the existing CBD to future developments in the Marina Bay area and also provide a pedestrian link.
However, the road extension will only be created in tandem with redevelopment plans for Shenton House and UIC Building. Although it will see the owners of UIC Building and Shenton House giving up part of their respective sites, they will be entitled to include the GFA on the land area to be vested in their redevelopment schemes.
The expression of interest for UIC Building closes on Feb 8.