Here's proof that commercial sector is unscathed by cooling rules

9 bidders fought for the latest commercial site.

According to Colliers International, the tender for the commercial site on Venture Avenue drew keen interests from nine contenders. 

The top bid by the Sim Lian Group at $701.1 million reflects $1,009 per sq ft per plot ratio, which is 9% above the second highest bidder and 10.6% above the third highest bidder.

The potential for strata subdivision on future development on the site might have spurred the enthusiastic responses – on the back of heightened interests for strata commercial units and spill-over investor demand from the residential sector.

It is possible that the winning developer might strata-subdivide the development – selling either the entire project, or selling a portion and retaining the balance for recurring income.

The commercial sector has not yet been affected by the Government’s property measures, although the planning authority is likely to be monitoring the unit sizes of planned commercial developments. As a result, interest from both investors and end-users is expected to be robust.

There could also be a latent hunger for strata-titled office space in non-central areas from small and medium enterprises (SMEs) that do not qualify for Business-1-zoned industrial space under the current zoning and planning parameters.

Should strata-titled office units be launched for sale at this site at around $2,000 per sq ft, businesses would be attracted to purchase, say a 1,000 sq ft unit, at a fairly affordable amount of $2 million. Such a purchase for an SME would provide a hedge against rental increases.

Strategically situated within the heart of Jurong Gateway and located within walking distance to Jurong East MRT interchange station, the site is well served by several retail and lifestyle offerings such as the existing and upcoming developments including Jcube, JEM and Westgate.

Companies can also enjoy complementary benefits and business opportunities offered by more than 3,000 multinational and global business companies located in the International Business Park and Jurong and Tuas industrial areas.

Compared to JEM and Westgate (both with office component), although the land parcel is sited slightly further from the MRT station, demand for the future office space on the site is likely to be healthy in the medium term. JEM is already fully pre-committed, while a remaining 50% of office space at Westgate is available for lease.

With the prospects of growth for the entire Jurong East area as a regional commercial hub, a new project on the subject site would enjoy steady demand for its office units when completed – particularly if they are strata-titled.