Potential developers will have an extra 27% of built-up space plus likely lower development charges
Singapore gadget central Sim Lim Square has launched its second collective sale tender with a sweetener for potential developers – an additional 27 per cent of built-up space plus the possibility of lower development charges.
But the reserve price remains unchanged at more than $1.25 billion. The closing date of the tender is Dec 30.
It was an unexpected bonus when Sim Lim Square’s collective sale committee did an investigation on the mall’s net lettable area and discovered the extra 27 per cent of built-up space, the committee’s chairman Vikas Gupta told The Straits Times yesterday.
“The current net lettable area of 237,066 sq ft seemed a little low due to the wastage of common areas, corridors… So, we appointed an architect to redraw the building map, and in the process, found that the built-up space was much higher than we expected at 499,715 sq ft – 27 per cent more than the 391,000 sq ft in the planning documents.”
Six-storey Sim Lim Square, with 492 units across a floor area of 22,007 sq m, was completed in 1987 and soon became known for its electronics and IT goods and services retailers. The plot is fully zoned for commercial use, so there is no mandatory requirement to top up the lease, which has 63 years left.
“On top of that, we also discovered that the mall had occupied a land parcel of 8,066.7 sq m. But over the years, some land was surrendered to the road reserve, resulting in the present land area of 7,260.6 sq m.
“What this means is when the future developer submits his development application, he can submit the land area of 8,066.7 sq m, which could potentially result in savings on development charges,” Mr Gupta said.
If this is verified and approved by the authorities, it could bring down the land rate to $2,501 per sq ft per plot ratio, from upwards of $3,300 psf ppr, Mr Francis Tan, chief investment officer of real estate consultancy SLP Scotia, the mall’s marketing agent, said.
The mall is trying to attract foreign funds making institutional purchases in Singapore, he added.
The land rate could also be reduced further if developers qualify for converting the property for other uses under the Urban Redevelopment Authority’s Strategic Development Incentive scheme, Mr Gupta said.
Announced on March 27, the scheme, which is aimed at encouraging the redevelopment of older commercial or mixed-use buildings, allows applicants to apply for a change in land use, plot ratio and building height.
In another bonus for Reits or mall operators looking to revitalise the mall, Sim Lim Square has been earmarked for community use. “This means that if the developer creates spaces for community use, they can request additional gross floor area, which will also lower the land rate,” Mr Gupta added.
Part of the mall’s sixth storey has also recently got approval to operate till 3am, as well as liquor and entertainment licences for nightclubs and pubs, he said. Hopefully, these incentives will help generate more buzz among developers for the mall’s second tender, said Mr Gupta.
Its first sale tender closed on July 22 without any formal bids. Mr Tan said this was due to several factors including the uncertain global economic outlook due to the US-China trade war, and muted sentiment after collective sale fever came to an end after the cooling measures last year.
Collective sale interest in some commercial properties has not entirely faded. The tender submission date for the $780 million collective sale of The Arcade in Raffles Place has been extended to March 5 next year from Jan 8, following feedback from developers that they require more time to assess the site.
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