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Sep 20, 2007

Marina View plot draws record $2b bid

It's a vote of confidence in market, say property watchers, who had expected much lower bids

By Fiona Chan, Property Reporter

A PRIME plot in Marina View has drawn a top bid of $2.02 billion - the first time the price of state land here has crossed the $2 billion mark.

The whopping bid yesterday pipped two other close offers, which also came in at near-record levels.

Property experts say the bullish bids are a continuing vote of confidence in the property market and could serve as a shot in the arm for market activity, which has quietened somewhat in recent weeks.

'It is exactly the confidence booster that the market needs to keep it going at this point in time,' said Ms Tay Huey Ying, director of research and consultancy at Colliers International.

The $2.02 billion bid was submitted by Macquarie Global Property Advisers (MGPA), a private equity real estate fund management firm partly owned by Australia's Macquarie Bank Group.

It is almost double what property watchers predicted the 1.02ha site would fetch in May, when its tender was first launched. The 99-year leasehold plot is located behind the One Shenton and Sail @ Marina Bay condominiums.

Indeed, all the three bids that came in before the site's tender closed yesterday were 'nearer the top band of the expected range', said Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

CapitaLand and Mapletree put in a joint bid of $1.84 billion, while Malaysia's IOI Group offered $1.6 billion.

The result of the tender, which is based solely on price, will be announced by the Government later.

Consultants said the turnout was quite good, given the site's high price and ongoing global credit uncertainty.

'In a market like this, I'm amazed that three bidders came out to offer between $1.6 billion and $2 billion,' said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore. 'It's a bid that very few people can afford.'

The top bid works out to about $1,409 per sq ft (psf) of gross floor area, said Mr Li Hiaw Ho, executive director of CB Richard Ellis.

He added that the plot could provide 800,000 sq ft of net lettable office space.

A 40-storey building can be built on the site, but 70 per cent of its gross floor area must be used for offices. The rest can hold more offices, hotel rooms, homes or shops.

Experts said building homes or strata-titled office units could be a quick way for the winning bidder to recover most of its investment. Homes, for one, could fetch more than $2,500 psf, said Mr Li.

But MGPA appears to be favouring a full-office development. It said in a statement yesterday that the site 'presents a rare opportunity to deve- lop a Grade A+ office building in the prime business district of Singapore, where strong demand coupled with limited supply makes now an ideal time for high quality office development'.

MGPA has been on an active buying spree here. In March, it agreed to buy Temasek Tower from CapitaLand for $1.04 billion.

Last month, it also bought 162 units of Allgreen Properties' Cascadia condominium in Bukit Timah for a median price of $1,527 psf, sources said.

fiochan@sph.com.sg