A HOTEL site on top of the Little India MRT station had yet to attract a single offer by the time its tender closed yesterday.
This is the first time in seven years that no bid has come in for a government land site, the Urban Redevelopment Authority (URA) said.
It released the 0.9ha plot at the junction of Race Course Road and Bukit Timah Road for sale in February, touting it as a parcel located within a historic and vibrant tourist destination.
Property consultants offered several reasons for the lack of interest in the site, ranging from its less-than-desirable location in Little India to the cheerless mood prevailing in the property market.
Mr Colin Tan, the head of research and consultancy at Chesterton International, suggested that the Little India site failed to draw bids because of the area's 'image problem' and the crowds.
'The hotel sector is one of the brightest spots in the market, so I see no other reason the site should have no bids,' he said.
But Mr Ku Swee Yong, the director of business development and marketing at Savills Singapore, said the problem might lie with 'budget' hotel plots.
'Because of higher construction costs, it's getting tougher to generate good profits for three- and four-star hotels,' he said.
Prospects for the hotel industry remain strong, with visitor arrivals expected to rise because of the upcoming Formula One Grand Prix and the integrated resorts.
But even the hotel sector could be affected by the overall gloomy market sentiment, said some experts.
'The last time we saw no bids for a site was when the market was very weak; it's usually a sign of poor sentiment,' said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.
'The overall property market is getting more uncertain, and developers or investors may think that it's too risky to commit right now.'
He also suggested that the market could be saturated with hotel sites. Since January last year, the URA has sold five parcels and made seven more available for applications from interested parties.
The Little India site is one of two hotel plots on the URA's 'confirmed list' of land sales for the first half of this year, which means the site was launched for outright sale rather than put on the 'reserve list' for developers to indicate interest.
All eyes are now on the other hotel site on the confirmed list, at Balestier Road, which was launched for outright sale in March. The tender closes on July 16.
Market watchers said the lack of response to yesterday's tender could lead the URA to put fewer sites on the confirmed list next month, when it announces its land sales programme for the rest of the year.
The last time a URA site closed without any bids was in February 2001, when two residential plots in Lengkong Empat and Geylang drew no interest at all.
All eyes are now on the other hotel site on the URA's confirmed list, at Balestier Road, which was launched for outright sale in March. The tender closes on July 16.
