With an additional 27% of built-up space and the likelihood of lower development charges, will Sim Lim Square be able to find a buyer at its second attempt for a collective sale?
More built-up space and lower development charges second time round
The original lettable area in the building which is home to many electronic goods and gadgets shops was 237,066 sq ft. However, the building’s collective sale committee felt that the total seemed a little low due to the space wasted on corridors and common areas. After hiring an architect to redraw the building map, the built-up space was found to be more than 391,000 sq ft (reflected in the planning documents). In fact, it was much higher, at 499,715 sq ft.
This considerable difference could prove attractive to potential developers. The site is zoned for commercial use and thus does not have the requirement for a lease top-up. There is about 63 years left on its lease. In addition, due to the surrender of part of its land to the road reserve, the future developer is able to submit the original land area of 8,066.7 sq m (prior giving up part of the land to the road reserve which meant the current land area is 7,260.6 sq m). This means that the land rate could drop from more than $3,300 psf to $2,501 psf.
The Urban Redevelopment Authority’s (URA) Strategic Development Incentive scheme also allows applicants who apply for a change in land use, plot ratio and building height to save some money should the future developer wish to incorporate aspects of community use. This would also lower the land rate.
Collective sale interest in commercial buildings sustained
While developers’ interests in residential sites may have waned somewhat, response to collective sales of commercial sites has remained fairly keen. Another site which has been launched for tender is The Arcade in Raffles Place. Its tender submission for a $780 million asking price has just been extended to March 5 next year as developers requested an extension for the better assessment of the site.
The Sim Lim Square site is located near the upcoming Rochor planning area and could be well-fitted to the rejuvenation of the area in the next decade. The area is also set to be a hinterland to the current Central Business District (CBD) and with its abundance of new residents, retail and office spaces, eateries, arts and cultural influences, new projects here will be much welcomed.