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It can be financially feasible to buy properties on sites with declining balance land tenures. As leases near expiry, the path to switching to interim uses needs to be smoothened for more productive land use.
[SINGAPORE] When news broke in July of the sale of Hotel Miramar Singapore, what stood out was that the property was on a site with only about 41.5 years left on its original 99-year leasehold tenure, issued in February 1968 when it was bought at a state land tender.
Despite knowing that the authorities had turned down a request to top up the site lease to 99 years, a fund managed by Singapore-based asset management firm Aravest went ahead to buy the Havelock Road property for S$160 million.
“The lease is shorter than you would normally like, but that’s accounted for in the pricing. We’re more than comfortable and quite happy to be in this investment,” Aravest chief executive officer Moses Song told The Business Times in an interview in October. The hotel has been shut for a refurbishment and will be rebranded as DoubleTree by Hilton.
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