It topped the highest bid in South Beach during the market's peak in 2007.
GuocoLand submitted the top bid for the Beach Road site worth $1.6b, or $1,706 psf.
According to Cushman & Wakefield, this reflects developers' increased optimism toward the office market.
The top bid set a record for commercial and white sites. It is 60% higher than the bid on South Beach during the office market peak in 2007.
According to DBS Equity Research, the 99-year leasehold land has a ground floor area (GFA) of around 950,000 sqft., comprised of 665,424 sqft. office component and 32,292 sqft. retail space.
Break-even cost could reach up to $2,372 psf based the GFA or $2,965 based on the net lettable area (NLA) due to costs of construction and funds, along with 60% leverage and four-year construction period.
However, Cushman & Wakefield noted that there is "a clear lack of participation by local major developers," as four out of the five bidders are foreign.
Cushman & Wakefield director Christine Li commented, "Although the Beach Road site has excellent attributes, the absence of several prominent and experienced mixed-use developers such as CapitaLand, Keppel and CDL in the latest tender is somewhat unexpected. This could be a sign of caution that the local players are less confident of their winning chances and are deterred by the aggressive land bidding behaviour of some foreign parties."
The Beach Road site is expected to be completed in 2022.
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