Saturday, August 13, 2011

Site at Upper Serangoon draws 15 bids

A PLUM residential site near Potong Pasir MRT station and good schools has attracted bids from no fewer than 15 property developers, far more than in recent successful tenders.
Despite the recent stock market turmoil, the top bid was close to market expectations, at $185 million from low-profile diversified property group Tuan Sing Holdings.

The crowded field of developers vying for the Upper Serangoon Road site is considerably larger than the number for successful land parcel tenders in May and June - fewer than 10, on average.

The 0.87ha site is able to yield 330 units in blocks of up to five storeys.

Tuan Sing's bid was a mere 3.5 per cent higher than the second highest bid of $179 million. The top bid translates to $567 per sq ft per plot ratio (psf ppr).

The tender for the site, which closed yesterday, attracted a mixed bag of bidders, ranging from industry big boys such as Far East Organization and Frasers Centrepoint, to smaller players such as EL Development.

Several contractor-developers such as Qingdao Construction took part as well.

Bids for the site were spread across a wide range, from $567 psf ppr down to just $240 psf ppr.

The 99-year leasehold site is nestled between Upper Serangoon Road and Pheng Geck Avenue.

It has a gross plot ratio of 3.5 and can be developed up to a maximum gross floor area of 326,394 sq ft.

Yesterday's top bid was lower than the $607 psf ppr winning bid for an adjacent site last year.

The land price for that site - that is currently being developed as Nin Residences - was 7 per cent higher than the top bid submitted for the Upper Serangoon Road parcel.

Dr Chua Yang Liang, who is head of research at Jones Lang LaSalle, said the bidding suggests that the recent market conditions have had only a slight effect on prices.

He added that developers are taking a long-term view of market conditions in Singapore and the region.

'It's still too soon to know where the property market is heading, whether this stock market activity is a short-term blip or a correction,' said Dr Chua.

Some analysts had expected a price of up to $196 million for the site.

Dr Chua said the modestly lower bid prices may have factored in developers' expectations of more muted property sentiment in the second half of this year.

Credo's head of research Ong Teck Hui agreed and said the similarity of the prices of the first few bids was evidence that the current market turmoil had caused the developers to take a measured approach to bidding.

But the site's considerable attributes would have proved a bigger consideration for the developers, said head of research and consultancy at SLP International Nicholas Mak.

'They aim to acquire sites with characteristics that would be very attractive to home buyers at a bargain land price, in case the property prices soften.'

The plot of land is located directly opposite the Potong Pasir MRT station, with future residents able to travel to the Central Business District within 10 minutes.

Well-established educational institutes such as Cedar Girls' Secondary School and St Andrew's Secondary School and St Andrew's Junior College are located within the neighbourhood.

CB Richard Ellis' executive director of residential Joseph Tan said this tender exercise clearly indicates that MRT sites are still considered to be prized plots, attracting interest relative to market conditions.

Mr Mak added that there was a significant presence of contractor-developers.

'This could be due to the site's proximity to the MRT station, which would increase the construction cost and the complexity of the project,' he said, adding that a contractor-developer might therefore be more confident that they could manage the construction process.

Homes at Nin Residences - which is made up of mostly one- and two-bedroom units - were sold at between $1,000 psf and $1,400 psf.

Sub-sales of 8@Woodleigh, another nearby property development, were made at between $980 psf and $1,330 psf.

Property experts estimate that the selling price of the new development could be around $1,000 psf.

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