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Sat, Oct 10, 2020 – 5:50 am
Singapore
A LOT has been said about the Golden Mile complex on Beach Road. Some praise it for its architectural and historical significance and call for it to be preserved, while others consider it an eyesore and feel it should be demolished.
On October 9, the Urban Redevelopment Authority (URA) announced that the Golden Mile complex will be proposed for conservation in light of its historical and architectural significance.
However, it remains to be seen how this will affect the building’s chances of a successful crowdsale.
The 16-story building has been the subject of two unsuccessful collective sales, both for S $ 800 million. Both tenders closed without bids.
Under the proposal, the main building of the 47-year-old complex with its characteristic semi-detached façade on top of a podium block is to be preserved.
In addition to 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 interest of the building owners in a collective sale. Incentives include an additional floor area that will allow the construction of an additional 30-story tower within the existing site, a partial development fee waiver on the additional floor area, a development fee waiver to enhance the value of the area gross floor area preserved, adjusting the boundaries of the land to be more regular, the option to complete the 99-year lease of the land, and the flexibility to adapt the building to a mix of possible uses.
Chris Koh, Director of Chris International, said: “With conservation, some owners will find that there is more certainty and may be reluctant to vote for the block sale knowing that the lease on the land will be renewed at the end of the lease term because the Building is preserved “.
He added: “If the owners still get the votes needed to proceed with the block sale, they will be tempted to ask for a higher price, but this may not be in their favor as the developers may not be willing to pay more knowing they have less flexibility to remodel the site and may even incur additional costs to preserve the building. Overall, keeping the Golden Mile as a Singapore landmark is a good thing, but it will not necessarily facilitate bulk selling. “
ERA Realty’s head of research, Nicholas Mak, said that while the incentive allows for the construction of a new 30-story building on the existing site, finding the space to do so can be challenging. “How is the facade of the building preserved and can still be built an additional surface?”, He questioned.
JLL Capital Markets Executive Director Tan Hong Boon said that despite conservation restrictions, “a collective sale may still be possible.”
He added that, “as long as the total expected returns are higher than the cost of purchasing the building and the costs of remodeling, there is still a possibility. Conservation buildings have that premium power to attract buyers.”
Lee Nai Jia, deputy director of the Institute for Real Estate and Urban Studies, said that while the building is preserved, there are also incentives for the collective sale to take place. “Incentives such as increasing its gross parcel ratio and waiving part of the development fee, among others, make the site more attractive to developers,” said Mr. Lee.
“Despite the economic headwinds, developers with significant reserves and looking to future development in the area may consider it a worthwhile risk.”
The decision to retain the Golden Mile Complex comes after an extensive two-year study that included the participation of various stakeholder groups, as well as work with various agencies.
The proposal to retain the Golden Mile Complex is now open for public comment and comment at the URA Center until November 8.
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