Wednesday, February 16, 2011

Punggol site surprises with $1.02b top bid

A PRIME Punggol waterfront site has attracted a surprisingly high tender of $1.02 billion, amid a fierce bidding battle between seven development groups.

Analysts had predicted that the 30ha plot at Punggol Central and Punggol Walk would attract plenty of interest but even they were surprised by the response.

The top bid - it was lodged by a joint venture comprising Frasers Centrepoint, Far East Organization and Sekisui House - works out to $753 per square foot, well above the $450 psf predicted.

The bid was also more than four times as high as the lowest at $250 million, which was submitted by Mezzo Development.

It was 20 per cent ahead of the $850 million second-place bid submitted by a joint venture between Mr Pua Seck Guan, Osim International founder Ron Sim and QingDao Construction.

Keppel Group was next with a $786 million bid, CapitaLand and CapitaMalls Asia bid $764 million, while Singapore Press Holdings teamed up with United Engineers with an offer of $693 million. Two GuocoLand units jointly tendered $681 million.

The winning group said yesterday that it wanted to build a waterfront development with about 680 flats with water views and a shopping mall with an estimated 365,000 sq ft of lettable space.

The development would be integrated with the upcoming town square and riverside promenade.

The developer will have to complete the project within seven years.

Credo Real Estate executive director Ong Teck Hui said the top bid was an optimistic one that leveraged on the long-term prospects of the blossoming new town.

Mr Nicholas Mak, executive director of research and consultancy at SLP International, said the bids reflected the fact that developers are still hungry for attractive sites, especially those with unique selling points.

Mr Mak said the healthy interest from developers could also be attributed to a number of different factors.

He said the winner of the tender would be able to lay claim to the first mixed-use site to be built by private developers. The commercial element would allow the site to be developed into the first retail mall in Punggol, giving a first-mover advantage in the up-and-coming residential area.

'Punggol has an expanding young middle-class population. Some of the HDB flats are more than five years old. Therefore, there could be a healthy upgraders demand for private homes in this housing estate,' said Mr Mak.

Mr Ong agreed: 'Pricing for residential and retail rentals can be expected to be optimistic given the site's prime location next to the Punggol MRT station, proximity to the bus interchange, schools and other amenities.'

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