REDEVELOPMENT OF FULLERTON BUILDING - A FEASIBILITY STUDY

Abstract

Property development is ranked as one of the most risky and speculative activity as it is highly susceptible to changes in economic and market conditions. Ideally, every developer should undertake a comprehensive feasibility analysis before embarking on a development project so as to evaluate the likelihood of success of the project. In Singapore, the growth of the hotel industry has been so significant that it has become one of the important sectors of the Singapore economy. Since, the late 1980s and up to 1996, the hotel industry has been enjoying high occupancy rates, averaging 81.2%. However, the current economic downturn and political uncertainties in the region have caused occupancy rates to dip to the 70-75% region. This current slowdown in the hotel industry gives an impetus to examine the market more closely. Fullerton Building is strategically located between the existing CBD at Collyer Quay and the new Downtown. Taking into account the building's distinctive architectural features and rich history, URA has earmarked it for conservation and refurbishment into a plush hotel. Far East Organisation Pte Ltd won the tender for the Fullerton Square site with a $110m bid in October 1997. This translates to about $203 psf and some consultants found this price 'staggering'. In addition, the Fullerton Square is technically and economically a difficult site to develop. This study will attempt to evaluate the feasibility and financial viability of the Fullerton Hotel taking into account the current economic uncertainties in the region. From the study, it is seen that Fullerton has great potential of success due to its prominent location and the expectations of a recovery of the tourism industry in the nest millennia. The findings obtained from the site, market and financial analysis indicate that the project is viable.