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S$2,248 psf ppr reserve price for Katong Shopping Centre seen as lofty
KATONG Shopping Centre is being launched for collective sale through tender on Thursday with a reserve price of S$630 million.
This works out to S$2,248 per square foot per plot ratio (psf ppr) based on the development's existing gross floor area (GFA) of 280,203 square feet (sq ft).
Currently the building's usage is full commercial and its existing GFA reflects a 3.223 plot ratio, as confirmed by a baseline report, said Cushman & Wakefield (C&W), which is marketing the collective sale of the property.
The company's director of capital markets Christina Sim said: "It is expected that Katong Shopping Centre will be a project ideal for 'additions and alterations' (A&A) to recreate a landmark mall in Katong. There is also a possibility of setting aside some 3,000 square metres (32,292 sq ft) for medical suites, subject to the approval of the competent authority."
Under the Urban Redevelopment Authority's (URA) Master Plan 2014, the 86,924 sq ft freehold site is zoned for commercial and residential use with a 3.0 plot ratio (ratio of maximum GFA to land area). C&W has applied to the URA for outline planning permission for full commercial use, which would be in keeping with the existing property's use (Katong Shopping Centre comprises only shops and offices in addition to car parking lots).
According to Ms Sim, if the URA gives the approval, a new full-commercial project on the site can be developed up to the current GFA. "No development charge would be payable."
Whether on an A&A basis or a total redevelopment angle, the pricing is considered lofty by most market watchers. However, C&W said that the en bloc sale provides a rare opportunity for a large developer/contractor or a consortium to acquire a big commercial site in the affluent Mountbatten/Amber Road locale.
C&W executive director of capital markets Shaun Poh said: "This asset may appeal to a developer keen on landbanking since it is not subject to Qualifying Certificate conditions as there is currently no residential component in Katong Shopping Centre and so long as there is no residential component in any future project (on the site)."
Tang Woon Ee, partner at Dentons Rodyk and Davidson, said: "Although according to the Master Plan, the site is zoned commercial and residential, the buyer may apply to the tax authorities for upfront remission of the 15 per cent additional buyer's stamp duty on the basis of an undertaking that there will be no residential units in the new project."
Katong Shopping Centre, which opened its doors in 1973, comprises a seven-storey podium block and a five-storey annex. In all, there are 425 shop and office units, in addition to 323 car park lots.
Owners controlling at least 80 per cent of the total share values and strata area in the development have given their consent for the collective sale.
City Developments controls 35 per cent of share value in the development through its ownership of 61 shop/office units and all the car parking lots - making it the largest owner in the development.
Ms Sim said that the future Amber and Marine Parade MRT stations are estimated to be 600 metres and 500 metres respectively from the property. "Added to this is the drive to make the Katong locality an attractive destination for tourists, with existing and new hotels."
The tender for Katong Shopping Centre will close on Sept 8.