Government's Rejection of Bid for Sims Avenue/Tanjong Katong Road Land

Er Dr Lee Bee Wah asked the Minister for National Development in view of URA's rejection of the only bid submitted for the Sims Avenue/Tanjong Katong Road land site (a) what was the objective of releasing this plot of land for tender; (b) what is the rationale for the Government's decision not to award the tender; and (c) how is this decision consistent with the Government's efforts to keep property prices from escalating.

Mr Khaw Boon Wan: The sale site at Sims Avenue/Tanjong Katong Road is within Paya Lebar Central. Our plan is to develop Paya Lebar Central into a major commercial hub over the next 15 years. The 2.1 ha site is meant for a mixed use commercial development.

The site attracted only one bid. The tender evaluation committee carefully assessed the bid and concluded that it was below fair market value. The tender award committee accepted the tender evaluation committee's recommendation not to award the tender.

We have an interest to preserve a stable and sustainable commercial property market. This is important to ensure the competitiveness of the Singapore economy.

To achieve this objective, we try to provide an adequate supply of commercial land to meet projected demand. In the pipeline, there is some 930,000 sqm of office space. This is about 200,000 sqm of new office space per annum over the next 5 years. The historical take-up rate is about 150,000 sqm per annum. We will continue to release a regular supply of office space through the Government Land Sales programme to meet market demand.

Our efforts have helped to stabilise the commercial office market. The rate of rental increase for commercial properties is slowing down. Island-wide rentals for office space increased by 0.9% in 3Q2011, the lowest quarterly rate of increase over the last six quarters. Office rentals are about 14% below the peak in 2008.

The intent to keep the commercial office market competitive does not mean that we should give away Government land below its fair market value.

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