What's next for Golden Mile Complex?

Proposed conservation of iconic building for its architectural significance draws mixed views on prospects for en bloc sale

Singapore

MUCH has been discussed about Golden Mile Complex at Beach Road. Some laud it for its architectural and historical significance and call for it to be conserved while others consider it an eyesore and feel that it should be demolished.

On Oct 9, the Urban Redevelopment Authority (URA) announced that Golden Mile Complex will be proposed for conservation in view of its historical and architectural significance.

However, how this will affect the building's chances of a successful collective sale remains to be seen.

The 16-storey building has undergone two unsuccessful collective sales, both times at S$800 million. Both tenders closed with no bids.

Under the proposal, the 47-year-old complex's main building with its signature terraced facade on top of a podium block will have to be retained.

Alongside the conservation requirements, a set of planning incentives will also be offered to support the adaptive reuse and commercial viability of the building given the building owners' interest in a collective sale. The incentives include bonus floor area which will allow the building of an additional 30-storey tower within the existing site, a partial development charge waiver on the additional floor area, a development charge waiver for the enhancement in value of the conserved gross floor area, adjustment of the site boundary to be more regular, the option to top up the lease on the land to 99 years, and the flexibility to adapt the building to a mix of possible uses.

Chris Koh, director of Chris International, said: "With the conservation, some owners will find there is more certainty and may be reluctant to vote for en bloc sale knowing that the land lease will be renewed at the end of the leasehold term because the building is conserved."

He added: "If the owners still get the required votes to proceed with the en bloc sale, they will be tempted to ask a higher price, but this may not be in their favour as developers may not be willing to pay more knowing that they have less flexibility to redevelop the site and may even incur additional cost to conserve the building. On the whole, conserving Golden Mile as a Singapore iconic building is a good thing but may not necessarily make it easier for the en bloc sale to take place."

Head of research at ERA Realty, Nicholas Mak said that even though the incentive allows for the construction of a new 30-storey building on the existing site, finding the space to do that may be a challenge. "How do you conserve the facade of the building and still be able to build additional floor area," he questioned.

JLL's executive director of capital markets, Tan Hong Boon, said that despite conservation restrictions, "a collective sale may still be possible".

He added that, "so long as the total expected returns is higher than the cost of buying the building and redevelopment costs, there is still a chance. Conservation buildings do have that premium power to attract buyers."

Lee Nai Jia, deputy director of the Institute of Real Estate and Urban Studies, said that while the building is conserved, there are also incentives for the collective sale to take place. "The incentives, such as increasing its gross plot ratio and waiving part of the development charge among others, make the site more appealing to developers," said Mr Lee.

"Despite the economic headwinds, developers with significant reserves and an eye to the future development in the area may consider it a worthwhile risk."

The decision to conserve Golden Mile Complex comes after an extensive two-year study that included engaging diverse groups of stakeholders, as well as working with various agencies.

The proposal to conserve Golden Mile Complex is now open for public feedback and comments at the URA Centre till Nov 8.

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