Citimac complex seeks S$1,350 psf ppr in en bloc sale

[SINGAPORE] The owners of Citimac Industrial Complex have hit the en bloc trail, with a minimum price of S$550 million, which works out to S$1,350 per square foot of potential gross floor area for the freehold site.

The unit land price figure is inclusive of an estimated development charge (DC) of S$109 million payable to the state.

Located a stone's throw from Tai Seng MRT Station, the 139,789 sq ft site can be redeveloped into a new project with 489,261 sq ft maximum gross floor area (GFA). The site is zoned for Business 1-White use, with a 3.5 maximum gross plot ratio. Of this, at least 2.5 plot ratio (translating to 349,473 sq ft GFA) shall be for Business 1 (or B1) use and the remaining GFA of up to 139,789 sq ft will be for white uses. Most developers would likely utilise the white component for retail use, given the site's prime Macpherson Road frontage.

The Citimac site is the largest freehold Business 1-White redevelopment site in Singapore to be put up for sale, according to Cushman & Wakefield, which is handling the collective sale through a tender that will close on Oct 30.

The property consulting group said it is expecting "very good reception" for Citimac especially from local and overseas mid-sized and large developers, given its prized location and the white component in its zoning. The potential future growth of the Paya Lebar commercial hub will drive strong investor interest, it added.

Christina Sim, director of capital markets at the property consulting group, said: "Given current market conditions and a dearth of freehold Business 1-White sites in prime locations, this site offers a unique opportunity to develop top-end Business 1 space for data centres, research and development, information technology, as well as a sales and distribution centre for the medical and aviation industries." Business 1 typically includes non-pollutive light industrial and warehouse use.

Market watchers acknowledged the site's prime location but said the pricing expectation is ambitious. A seasoned observer said assuming average selling prices of about S$4,500 psf for the retail space and S$1,200 psf for the B1 space, the land price could be around S$1,000 psf per plot ratio (psf ppr) at most, including DC. "This would be how established local developers would bid for the site, assuming 15 per cent profit margin," he said. That said, it may be conceivable for say a China player keen on investing in Singapore, to bid more aggressively.

In October last year, Guang Ming Industrial Building, also near Tai Seng Station albeit on a longish, somewhat irregular-shaped strip of nearly 20,000 sq ft land, fetched S$45.8 million or S$837 psf ppr.

In May this year, Irving Industrial Building, a 65,309 sq ft site with a more regular shape albeit tucked from the main road, was launched for collective sale. The reserve price was said to be S$200 million (or S$1,079 psf ppr) but there were no takers.

The latest talk in the market is that a potential buyer, believed to be China's Nanshan Group, has been secured and that efforts are underway to get the requisite consent level from Irving Industrial Building's owners at a lower price that would reflect around S$930 psf ppr.

Citimac Industrial Complex in comparison is a rectangular-shaped plot boasting prime road frontage. "It is likely that the developer will break even on B1 use, with profit likely to come from the retail space for the white component," said Ms Sim.

Cushman & Wakefield brokered the sale of Guang Ming Industrial Building and is also marketing Irving Industrial Building. Both are also freehold and have the same zoning as Citimac Industrial Complex.

JLL regional director (investments) Tan Hong Boon noted that freehold industrial sites are not easy to come by. "Sources are typically from single-owner sales and collective sales of generally small to medium sized, old projects," he added.