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Hong Fok’s Orchard site plans

It plans to develop International Bldg site with $62m state plot it is buying

HONG FOK Corporation yesterday gave a glimpse of its plans for a commercial development on the combined site of its International Building property at Orchard Road and an adjoining 9,023 square feet plot along Claymore Hill that it plans to buy from the state for $62.35 million.

Based on earlier reports, International Building, inclusive of a surface carpark at the rear, has a total land area of 45,467 sq ft. In its statement to the Singapore Exchange, Hong Fok said that unless prior written permission of the government is given, the land it plans to purchase from the state will be used together with its International Building site for the purpose of commercial development with a gross plot ratio not exceeding 6.16.

Market watchers said that based on this plot ratio, the combined 54,490 sq ft site – comprising International Building, including its surface carpark, and the state plot Hong Fok plans to buy – can be developed into a commercial project with 335,660 sq ft maximum gross floor area (GFA). Assuming an 80 per cent efficiency, the net lettable area would work out to about 268,530 sq ft.

Hong Fok did not elaborate on its plans for International Building, but market watchers said that it has a few options. One would be to do a full redevelopment on the enlarged site (including the state plot being purchased), involving tearing down the present 12-storey retail and office block.

Another option would be to spruce up the old block and connect it to a new extension that could be developed on the new site alone, or on the new site as well as the carpark.

Market watchers said that based on a full redevelopment scheme and assuming a 335,660 sq ft maximum GFA, the construction costs, fees and interest would easily amount to about $170 million. They also reckoned that Hong Fok may have to pay a development charge to the state for building a bigger project.

In its release yesterday, Hong Fok said that it has accepted an offer by the Singapore Land Authority to alienate the state land on a freehold basis for $62.35 million.

The offer was made following an application by Hong Fok to buy the land, and the proposed alienation is subject to several terms and conditions. Hong Fok will fund the purchase by bank borrowings.

Hong Fok also owns The Concourse at Beach Road, where it is expected to develop apartments for sale.

On the stock market yesterday, Hong Fok ended six cents higher at $1.33.

 

Source: Business Times 6 Dec 07

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