Saturday, May 12, 2012

Strong interest seen in Farrer Drive site


Business Times: Sat, May 12
ANYWHERE between 10 and 20 developers could make a beeline for a plum 99-year private housing site at Farrer Drive, next to Sommerville Grandeur and just a few minutes' walk from the Farrer Road MRT Station. The site has been triggered from the government's reserve list.

While the high-end residential market has been quiet, developers eyeing the prospects of building small-format apartments to keep the lump-sum apartment prices relatively affordable would find the District 10 plot attractive. Another draw is the site's manageable size with the all-in development cost estimated at about $166 million based on the top end of pricing expectations for the plot.

These estimates from property consultants came after the Urban Redevelopment Authority announced yesterday that an unnamed party has made a successfully application for the site's release with a commitment to bid at least $88.888 million ($823.33 per square foot of potential gross floor area) at tender. Analysts forecast the winning bid could fall in the $850-1,100 per square foot per plot ratio (psf ppr) range.

The 67,471 sq ft plot, with a 1.6 plot ratio (ratio of maximum gross floor area to land area), can be built up to eight storeys and some market watchers say it could potentially yield about 100-200 apartments, depending on unit size mix.

International Property Advisor chief executive Ku Swee Yong, estimates the winning bid could be as high as $1,100 psf ppr, which would translate to a breakeven cost of about $1,550 psf. "The project's average selling price could be around $1,700-1,800 psf assuming it comprises mostly one and two-bedder apartments. Just the first 20 per cent payment from buyers - assuming all the units are sold before construction begins - could be enough to cover the construction costs." he added.

Mr Ku estimates the all-in development cost at about $166 million - considered a relatively bite-sized quantum which should draw construction companies, boutique developers and some of the bigger players as well to participate in the tender for the site. He expects 10-20 bids.

Savills Singapore research head Alan Cheong predicts "at least 10-15 bids", pointing out that "any plot in the $100 million range will attract a swarm of bidders". He predicts the winning bid could be around $930 psf ppr, or $100 million.

CBRE executive director Li Hiaw Ho, who's expecting 15-20 bids, reckons the top bid could be around $1,000 psf ppr, translating to a breakeven cost of about $1,450-1,500 psf and selling price of around $1,700 psf on average, assuming the project includes a fair number of small-format units.

Giving a more cautious take, Credo Real Estate executive director Ong Teck Hui predicts "realistic bidding" as bidders will factor the supply overhang in prime districts. He predicts the top bid at $850-950 psf ppr.

"The average price of units up to eight storeys in a new project nearby is about $1,500 psf," he added, alluding to d'Leedon. The 36-storey project has a whopping 1,715 units ranging from one-bedroom-with-study to four-bedroom apartments as well as 12 strata semi-detached houses.

Mr Ong also described the latest Farrer Drive plot on offer as a "remnant infill site sandwiched between existing condominiums but having an attractive District 10 address". It will be a smallish development with low absolute land price which makes it affordable to even smaller developers, he adds.
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