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Singtel gets URA nod for hotel project on Hill Street site
SINGTEL has received provisional permission to redevelop its Hill Street property into a hotel, setting the stage for the sale of the asset.
The property comprises three buildings - a black tower block that houses Singtel's Central Exchange and two lower-rise buildings that are used as offices.
It is made up of two adjacent rectangular land parcels - a 25,021 square foot site with 999-year leasehold tenure and a 14,717 sq ft plot with 99-year leasehold tenure starting from Jan 1, 1955, translating to a balance lease term of about 36 years.
Both sites are zoned utility under the Urban Redevelopment Authority's Master Plan 2014.
Market watchers believe that, going by Singtel's past property sales, the telco is mulling a sale of the Hill Street property, using its redevelopment potential as the selling point.
In February, URA granted provisional permission to Singtel for a proposed development of a 172-room hotel with a gross floor area (GFA) of 12,730 square metres (about 137,024 sq ft) , as well as 190 sq m (2,045 sq ft) of retail space.
When contacted, a Singtel spokesperson said: "We are exploring options for the Hill Street site which may include the potential sale of the land."
Property consultants said that it was difficult to estimate a price for the property as there are various factors to consider, such as zoning and lease tenure which will have a bearing on the amount of taxes that the developer of the site will have to pay to the state.
Said a seasoned property investment sales consultant: "The price for this property will be a sum of various parts and will have to factor in among other things, either a differential premium (DP) or development charge (DC) payable to the state for a change of use. In addition, the owner could seek a lease top-up to 99 years for the leasehold plot, from the Singapore Land Authority, which if granted would entail payment of lease upgrading premium."
Chee Hok Yean, managing partner of hotel consulting firm HVS Asia Pacific, estimates that based on the provisional permission granted for a 172-room hotel with 12,730 sq m GFA, the average room size would be about 37 sq m after factoring in common areas, facilities and back-of-house operations.
Assuming an upscale (or four-star) hotel is built on the site, the gross development value could be, say, S$1 million per room - translating to an absolute quantum of S$172 million.
Then, one would deduct from this figure the DP/DC and lease upgrading premium if there's one - to arrive at the residual land value. That would be how much a buyer would pay Singtel for its Hill Street property.
The asset is located between Stamford House and Masjid Burhani, and is just a stone's throw from the landmark Singapore Chinese Chamber of Commerce and Industry building.
Property industry observers reckon that Singtel's move to seek planning permission for a hotel development was probably inspired by plans for The Patina, Capitol Singapore, a 157-room, six-star hotel which is to be located in Stamford House and Capitol Building.
The hotel, which will be part of the Capitol Singapore mixed-use integrated development, was scheduled to be opened by end-2015 but this has been delayed by a dispute between the owners of the Capitol Singapore development - Perennial Real Estate and Pontiac Land Group affiliate Chesham Properties.
Ms Chee noted that Singtel's Hill Street site was in an "established hotel precinct". Besides the upcoming Patina, other hotels nearby include Grand Park City Hall, and the Swissotel and Fairmont hotels in the Raffles City complex. "An upscale hotel on this site would do well, attracting both business and leisure travellers, given the proximity to several MRT stations and the civic district."
Singtel has sold a number of properties, often after obtaining planning approval for redevelopment to higher use.
For example, in 2005, the telco sold its former telephone exchange in Jalan Ulu Sembawang, with a freehold land area of 66,704 sq ft, for S$17 million to Centrepoint Properties (now known as Frasers Centrepoint).
In 2006, Singtel divested a string of properties - including an 87,086 sq ft freehold former telephone exchange site in Old Holland Road (for S$29.8 million); the 256,483 sq ft Singtel Academy site at the junction of Hillcrest and Dunearn roads which was sold to MCL Land for S$102.5 million; and a former bulk-cable storage facility at 50 West Coast Road, which went for S$33 million to Frasers Centrepoint.
In the same year, Singtel offloaded the former Crosby House along Robinson Road for S$163.4 million to a Lehman Brothers-Kajima Overseas Asia partnership. They redeveloped the site into the current 71 Robinson Road office block, selling the property on a turnkey basis to Commerz Real in April 2008 while it was still under construction.