Wednesday, January 30, 2013

12-way battle for plum Jurong site


Developers' appetite for land unabated despite cooling measures

The Straits Times
January 30, 2013

A PLUM Jurong West residential site sparked a 12-way battle among developers although the tough new property curbs seem to have kept bids from going through the roof.

Experts had expected the top bid to range from $540 to $680 per sq ft per plot ratio (psf ppr) when the tender was launched last November, but that was before the cooling measures hit a few weeks ago.

MCL Land submitted the top bid of $438.9 million - or $651 psf ppr - for the 99-year leasehold residential site on Jurong West Street 41.

That was at the upper end of the range but MCL Land chief executive Koh Teck Chuan told The Straits Times that the measures did have a dampening effect on the bids.

"Given the last few tenders, we would probably have seen bids above $700 psf ppr without the measures. Developers have taken into account the cooling measures and are taking a more measured approach, but they are not bearish," he added.

The MCL bid was just 3 per cent more than the $424.9 million - or $631 psf ppr - offered by UOL Group unit Secure Development.

Other bidders for the 22,357 sq m plot included a joint bid by Frasers Centrepoint, Far East Orchard and Sekisui House, Low Keng Huat and Mezzo Development, which lodged the lowest bid of $243.8 million - or $362 psf ppr.

MCL's Mr Koh said the project will have 650 to 700 units of one- to four-bedroom apartments.

Experts said the strong showing in the tender indicates that developers still want good sites.

The Jurong plot is 450m from the Lakeside MRT station, which will eventually be linked to the Jurong Region Line, and there will be clear views of Jurong Lake, noted CBRE's executive director of residential, Mr Joseph Tan.

"The keen interest from developers resulted in bids coming in very close. The top six bids were within 10 per cent of each other," he added.

"This shows that developers are still on the hunt for sites with good location attributes and demonstrates their confidence that the market will respond positively to the project."

Based on the competitive number of bids and high land prices submitted in the tender, it seems that some developers do not expect private home prices to fall in the next one year or so despite the latest measures, added Mr Nicholas Mak, head of research at property consultancy SLP International.

Colliers International's director of research and advisory services, Ms Chia Siew Chuin, said that "there appears to be no loss of optimism from developers" for the first tender of a pure residential site after the punitive cooling measures were unveiled on Jan 11.

"Buyer demand should come from professionals working in the industries in the Jurong and Tuas areas as well as upgrader demand from the Housing Board estates in Jurong East and Jurong West," she added.

Mr Ong Teck Hui, Jones Lang LaSalle's national director of research and consultancy, expects average selling prices for the launch to be close to $1,200 psf or higher.

Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group, notes that while Jurong East will be the biggest commercial hub outside the central business district, it has limited land parcels for residential development.

Those who want to live near the hub might have to look to Jurong West instead. The Canadian International School next to the site also provides a good catchment of tenants, he added.

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