Wednesday, August 17, 2011

Serangoon Gardens site fetches $105m

THERE was more interest than expected in a landed housing site in Serangoon Garden Way, although the prices tendered did not set the world on fire.

Experts said the level of interest reflects the strong demand for such homes amid limited supply.

There were 16 bids for the land, which has a 99-year lease, with a combined offer from City Developments (CDL) and Hong Leong Group's subsidiary Hong Realty the highest.

Its bid of $105 million - or $343 per sq ft of site area - was 10 per cent ahead of the $95.1 million tendered by ZACD Investments.

ZACD's major shareholders include Ms Sim Kain Kain and Mr Yeo Choon Guan, former directors of property consultancy SLP International.

Other bidders included SK Land, EL Development, MCL Land, private equity fund Lucrum Development, Chip Eng Seng and a unit of Kheng Leong.

Bergendale Investments lodged the lowest bid of just $22.2 million - 79 per cent below the top offer.

About 80 homes can be built on the 2.84ha plot, but strata-landed houses will not be allowed, said the Urban Redevelopment Authority.

SLP International research head Nicholas Mak said terraced units of 1,500 sq ft to 2,000 sq ft of built-up area might have a break-even price of about $1.9 million.

Mr Ong Teck Hui, Credo Real Estate's head of research and consultancy, said the tender attracted more interest than he expected.

'The keen interest by so many parties is due to the fact that landed sites are scarce so developers who are keen to develop landed homes have no choice but to bid for sites such as this,' he added.

'Furthermore, landed homes are generally in good demand and Serangoon Gardens is a popular location among landed buyers.'

CDL told The Straits Times that it is exploring a proposed terraced housing development, with a launch expected next year.

'CDL is familiar with the Serangoon Gardens area, having launched Goldenhill Villas, a freehold terraced-housing development just minutes away from the Lorong Chuan MRT station, in 2004,' the firm added.

Experts say the Serangoon Gardens site's proximity to the Central Expressway is a drawback as some homes could be affected by noise and dust pollution.

SLP's Mr Mak said developers are chasing land with strong selling attributes.

Landed property is a hot commodity and is limited in supply compared to non-landed homes. The average landed home price has seen percentage gains of roughly double those for condos and apartments over the past three years, Mr Mak added.

And Mr Ong noted that landed homes comprised 35 per cent of the total private residential stock 10 years ago, but the proportion has dipped to 27 per cent.

Over the same period, non-landed stock also grew by 55 per cent, while landed supply expanded by just 6 per cent.

More than 42,000 non-landed units are under construction but only about 2,000 landed ones were being built as of June, so the supply gap will be even more pronounced.

Mr Mak estimates that prices of landed homes will climb 5 to 8 per cent over the rest of the year, further building on growth of about 8 per cent in the first six months.

A site at the junction of Chestnut Avenue and Almond Avenue that can accommodate 35 landed homes is expected to go on sale in October, with experts expecting more than 10 bidders.

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