11 bids for exec condo site in Sengkang

AN EXECUTIVE condominium (EC) site in Sengkang has drawn a whopping 11 bids, with the winning offer trumping analysts’ expectations by a fair margin.

The 19,000 sq m site, which can be developed into 520 apartments and is near Buangkok MRT station, was topped by joint bidders Frasers Centrepoint’s Opal Star and Lum Chang Building Contractors. Their valuation of the asset came to $193.28 million, or $315 per sq ft (psf) of gross floor area.

They nudged MCC Land (Singapore) and its bid of $190.7 million, or nearly $311 psf of gross floor area, into second place. The third bid of $181.19 million, or $295.3 psf of gross floor area, came from Hoi Hup Realty, Sunway Developments and Hoi Hup J.V. Development.

Analysts had expected lower bids of between $190 and $300 psf of gross floor area, which would translate into a final selling price of $550 to $600 psf.

By the close of the tender yesterday, developers large and small had put in pitches, from Far East Organization to Sim Lian Land and Chinese firm Qingjian Realty.

City Developments’ unit submitted the second-to-last bid of $140.38 million, or $228.8 psf of gross floor area, while Boon Keng Development was last in with an offer of $121.8 million, or $198.5 psf of gross floor area.

CBRE Research said the large number of bids showed that developers continued to have an upbeat outlook for the suburban residential market, and signalled that they were keen to build up their land banks for suburban development.

‘Six of the 11 bidders expect the new development…to be launched above $600 psf, which would be a reasonable average selling price for a new EC project at this location in today’s market,’ said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

‘This indicates that about half of the developers in today’s tender expect the price of entry-level homes to increase in the next year or so.’

The winner of the site will have to set aside 95 per cent of the units during the first month of sale for first-time home buyers, as stipulated by the Housing Board.

Frasers Centrepoint is looking to build 500-plus units on the plot, said a spokesman.

‘This site is well located, and in view of the tight supply and great demand, we are confident that it will be an attractive development especially to home buyers who have been recently priced out of the market,’ he said.

The units are not expected to be cheap, given that the top bid is the highest received for an EC site since land was made available for sale from this source in 1997, property experts said.

The previous record, set in May 1997, was at $220 psf of gross floor area, according to CBRE Research.

Based on the top bid’s value, analysts estimate the break-even level to be about $600 to $640 psf, which indicates that final selling prices could range from $650 to $700 psf.

PropNex chief executive Mohamed Ismail said that such a price ‘will seem reasonable’ come the second half of the year, when developers who bought land recently at some $500 psf or more ‘will be marketing their private mass market condos at more than $900 psf’.

At nearby The Rivervale EC, Florida EC and Park Green EC, units were sold at $520 to $600 psf between last October and last month, said CBRE Research.

The Government last put up an EC site for sale in Punggol in September 2008 but failed to attract any bids. The last EC launched was La Casa in Woodlands in May 2005 – for around $550 psf – which was completed in early 2008.

HDB announced yesterday that it will put up for tender a land parcel along Yishun Avenue 11 within the next two months. The site is earmarked for housing development under the Design, Build and Sell Scheme (DBSS) and will have a potential yield of 700 flats, it said.

Source : Straits Times – 5 Mar 2010