A COMPANY linked to construction firm Low Keng Huat yesterday put in the top bid for a public housing site under the Design, Build and Sell Scheme (DBSS) for condo-style public flats.

But there was not much competition: only one other bid came in for the plot at Upper Serangoon Road opposite Serangoon Secondary School, the Housing Board said yesterday. This is the weakest reception for a DBSS tender since 2008.

Kwan Hwee Investment beat the other contender, Sim Lian Land, with a bid of $155.23 million. The company came in second in a tender last month for a DBSS site at Bedok Reservoir Crescent.

The Upper Serangoon plot measures 215,278 sq ft and has a maximum gross floor area of 753,474 sq ft. This works out to be about $206 per square foot per plot ratio (psf ppf).

The site is estimated to yield 630 dwelling units.

Mr Nicholas Mak, research executive director for SLP International Property Consultants, said the recent slew of sites announced for sale by the Government could be one of the reasons for the low number of bids for this plot.

The Government Land Sales programme for the first half of next year will have a total of 30 sites that can generate a record 14,300 residential units – higher than the 13,900 residential units offered for the second half of this year.

For that reason, said Mr Mak, some developers may be conserving their residential resources for upcoming land tenders.

‘Another reason is that some developers may also be concerned that the HDB resale market may cool, thereby reducing the demand for DBSS flats,’ he said.

He estimates that Kwan Hwee Investment’s bid could translate to a break-even cost of about $420 to 450 psf. He added that this would mean a five-room flat in the project could be launched at a price of $500,000 to $535,000.

Meanwhile, Punggol will soon see the launch of its first executive condominium, located in Punggol Central.

Prices at Prive will average between $660 and $690 psf, said NTUC Choice Homes Co-operative in a press release yesterday. It is jointly developing the project with CEL Development.

The four-tower development will comprise 680 apartments, ranging from two- to four-bedroom units.

Apartment sizes start from 775 sq ft for a two-bedder to 1,442 sq ft for a four-bedroom unit.

Viewing and e-application start from Friday, while sales bookings start from Dec 10.

Source: Straits Times, 1 Dec 2010

Major projects will boost residential and office space in the area

THE dodgy bars and seedy karaoke pubs of Tanjong Pagar will soon be giving way to high-rise condominiums, glitzy hotels and plush offices amid a radical makeover for the area.

The multibillion-dollar revamp is being driven by the Government’s strategy to promote new office, residential and other developments in the area.

There are also aims to make Tanjong Pagar the next waterfront ‘city’ and a potential rival to the iconic Marina Bay.

One eye-catching development underlines the scope and ambition of the area’s revitalisation.

The mammoth GuocoLand development on the 1.5ha plot at the corner of Peck Seah Street and Choon Guan Street promises to be a landmark project and, at 280m high, among the three tallest buildings in Singapore.

The developer, which paid $1.7 billion for the site, plans to build the mixed-use project on top of Tanjong Pagar MRT station and spend up to $3 billion, according to earlier reports.

GuocoLand also indicated earlier that the development could consist of two towers with a hotel and office, residential and retail space.

Company secretary Dawn Lum said: ‘The project will also be the first to incorporate a ‘City Room’ fronting a park. The City Room is a requirement by the Urban Redevelopment Authority (URA) to bring life to the area by creating inviting spaces for public use.’

Mr Colin Tan, head of research and consultancy at Suntec Chesterton International, predicts the development will play an ‘earth-shaking’ part in defining the future character of the area.

‘If the property has more office space, we might see more office spaces coming up. If there are more residential units, then the residential status of the area might be reinforced,’ he said.

A slew of other developments are also on the cards. Earlier this month, the URA opened tenders for a 0.23ha hotel site at the corner of Gopeng Street and Peck Seah Street. The 99-year leasehold site has a maximum gross floor area of 1,804 sq ft, and can be built up to 30 storeys. The site is opposite two other hotel plots sold by the URA in 2007.

More residential units are on the way as well. Keppel Tower and GE Tower will be turned into a high-rise condominium with shops and restaurants on the first floor.

The project is a result of a rare land-swop deal between real estate investment trust K-Reit Asia and Keppel Land.

Keppel plans to build two towers consisting of 620 apartments in total.

Heritage sites like the Tanjong Pagar Railway Station will be in on the action too.

The station will move to a new home in Woodlands as part of a historic land-swop deal with Malaysia, but the existing building will be conserved as the centrepiece of a new development.

Earlier this year, the Economic Strategies Committee highlighted Tanjong Pagar as the next waterfront ‘city’, pointing out that the neighbourhood’s prime location at the fringe of the city, size and potential to support future growth have given it sufficient clout to rival Marina Bay.

Ms Agnes Tay, commercial director of Savills Singapore, sees high potential for office rentals in the area.

‘The average Grade A rental rate in Tanjong Pagar is $6.50 per sq ft, up some 40 per cent from the peak in the second quarter of 2008,’ she said.

But some analysts say those keen to enjoy the area’s full potential will have to wait another 10 to 20 years.

Mr Ong Teck Hui, head of research at Credo Real Estate, said: ‘The waterfront city idea is a long-term plan…The authorities can’t push out so many sites at one time. The market won’t be able to absorb it, and the demand may not be there.’

Mr Tan observed that the redevelopment of the area might prompt the sale of some commercial offices in the area.

‘That possibility depends on whether the owners come together for collective sales,’ he said.

Source: Straits Times, 27 Nov 2010

Many residential plots in Govt’s latest land release programme are near MRT

THERE are plenty of plum sites among the new plots in the Government’s latest land release programme to tickle the fancy of developers.

The 17 plots with a residential aspect on the confirmed list include 11 that are near MRT stations, always an inducement for builders and home buyers.

The decision to spice up the sites on offer this time might be due to the lack of response to an executive condominium (EC) site in Jurong West.

The land did not receive a bid when its tender closed in August, likely due to its remote location and increasingly selective developers, who have their pick amid a bumper land supply.

Most sites in the release announced on Thursday are also near previously launched plots in Punggol and Buangkok that received strong demand from developers, said DMG & Partners analyst Brandon Lee.

Mr Lee added that the site locations may be aimed at meeting market demand and also strategically based on ‘regions that the Government is trying to spruce up’.

Mr Marc Boey, the Urban Redevelopment Authority’s (URA) group director of land sales and administration, said on Thursday that ‘the larger consideration behind putting so many sites in the North-east is to develop Punggol and Sengkang towns since these are new towns’.

‘If you look at Hougang, we also have some sites to cater to HDB upgraders,’ he added.

Confirmed list sites go on sale regardless of interest and are often an indication of the Government’s strategic development plans. Land on the reserve list is put up for tender only if developers make an acceptable initial offer.

Of the 17 newly introduced sites with a residential component on either the reserve or confirmed lists, two are in Hillview Avenue in the Bukit Batok planning area.

That these were included probably signifies the Government’s intent to further build up the area in tandem with the completion of infrastructure works such as Hillview MRT Station. Part of Downtown Line 2, it is slated for completion in 2015, experts said.

Mr Ong Kah Seng, Cushman & Wakefield’s senior manager of Asia-Pacific research, said Hillview was once a semi-industrial area but was converted largely to residential use in the 1980s. This prompted the building of various condo projects.

One of the Hillview Avenue sites is a commercial and residential plot on the confirmed list which is estimated to be launched in February next year.

It was scheduled to be made available for sale on the reserve list in October 2008 but was eventually withdrawn amid a poor market.

The other site is for residential use and is on the reserve list.

DMG’s Mr Lee said that the last government land site sold in the area was a Bukit Batok East plot in 2000. Far East Organization has since developed it into the 572-unit Hillview Regency.

The Government has also released smaller commercial sites such as the 0.29ha plot at the corner of Robinson Road and Cecil Street and a 1.42ha site in Paya Lebar. These could yield about 92,120 sq m of commercial space.

The URA said smaller sites which can be completed in about three years will help allay fears of a shortage of office space in 2014 once most ongoing developments have been completed.

Dr Chua Yang Liang, research head at Jones Lang LaSalle, said the release of the Robinson Road site was not surprising given the Government’s intent to rejuvenate the Tanjong Pagar area into an integrated zone for ‘live, work and play’.

Two hotel sites in Kallang Riverside are on the reserve list. A second parcel has been introduced for the first half of next year even though the first site did not draw any acceptable bids from developers when on the reserve list under the previous land sales programme.

Cushman’s Mr Ong said that the inclusion of the two hotel sites could be due to the level of optimism in the industry thanks to increased visitor arrivals.

Mr Li Hiaw Ho, executive director of CB Richard Ellis Research, added that Kallang has been earmarked to be gradually transformed into a waterfront precinct with housing and the upcoming Sports Hub.

‘A river-view hotel catering to athletes and other sports fans will help to further enhance the development of the Kallang area,’ he added.

The last hotel site in the Kallang area was awarded in October 2008 to Citywide Land for $51 million, or $250 per sq ft per plot ratio.

Source: Straits Times, 27 Nov 2010

THE Urban Redevelopment Authority has made a commercial/residential plot in the Bukit Panjang area available for application.

The Reserve List site is next to an existing LRT station and the future Bukit Panjang MRT Station under Downtown Line 2, which will be connected to key precincts in the city centre such as Bugis and Marina Bay.

At least 35 per cent of the 612,078 sq ft maximum gross floor area (GFA) must be set aside for commercial use.

The project’s residential component could yield about 310 apartments. The 1.9 hectare site – at the corner of Petir and Jelebu roads – is occupied by a bus interchange, which will have to be redeveloped and integrated within the future development. The GFA for the permanent bus interchange will be counted as part of the total GFA for commercial use, URA said.

Despite the fact that the state will continue to roll out a substantial quantum of residential land through the Confirmed List in the first half of 2011, some developers could still be keen on applying for the Bukit Panjang mixed-use plot to be released for launch from the state’s Reserve List if they are keen on embarking on a suburban shopping centre development.

And the sale of the residential component would help finance the development, analysts say. ‘Those keen on the site would have to be confident of making the shopping centre successful,’ says Credo Real Estate executive director Ong Teck Hui. ‘The mall would have to be sufficiently large and have an attractive tenant mix to create critical mass and compete with the surrounding malls.’

The plot is a stone’s throw from Bukit Panjang Plaza and Ten Mile Junction.

Cushman & Wakefield senior manager (Asia Pacific research) Ong Kah Seng says that if the plot were launched today, it could draw about five bids, with top offers ranging from $330-370 per sq ft per plot ratio.

‘They would probably be looking at an average selling price of about $770-830 psf for the apartments assuming they are marketed in the second half of next year,’ he said.

Earlier this year, Far East Organization clinched the Ten Mile Junction site in a state tender for $164 million or $437 psf ppr. It plans to retrofit the existing retail space to create a new mall called Junction 10, with about 120,000 sq ft of retail space, and develop 338 small office-home office (SoHo) units. The construction cost for the entire project is estimated at $100 million.

The SoHo project – called The Tennery – will be launched in the first quarter of next year. The units are expected to be upmarket – along the lines of Far East’s The Greenwich in the Seletar Hills area.

Source: Business Times, 27 Nov 2010

DEVELOPERS eyeing prime Marina Bay land might have to wait until at least 2013 before getting a chance to lodge a bid.

That is when the Government is expected to start releasing 11 parcels of land in step with the completion of infrastructure works in the area. These projects include the Downtown rail line and the Marina Coastal expressway, which will be completed in phases in the next few years, said the Ministry of National Development (MND) yesterday.

Urban Redevelopment Authority (URA) urban planning and design director Andrew Fassam said about 1.75 million sq m of gross floor area could stem from these parcels, about four times the area of nearby Marina Bay Financial Centre. The 11 sites may be released individually in future land sales programmes or combined with neighbouring plots.

However, the four mixed-use land parcels to be jointly developed by Malaysia and Singapore as part of the railway land swop deal are expected to be vested for development next year. The four land parcels have a gross floor area of 341,000 sq m, part of which will be for office use. These sites and two other land swop deal plots can yield a combined gross floor area of 500,000 sq m.

URA group director of land sales and administration Marc Boey said smaller sites have been released to address concerns that there might be a shortage of office space in 2014 once most ongoing developments are completed. These sites, such as one announced yesterday in Cecil Street and one on the corner of Peck Seah and Choon Guan streets, can be completed in about three years, he said.

Apart from the government land sales programme, an additional supply of about 39,000 sq m of gross floor area of commercial space can be expected to be released by various government agencies in the first half of next year, the MND said.

Source: Straits Times, 26 Nov 2010

URA wants to pace out development of the area with M+S factor looming
(SINGAPORE) The supply of commercial space on the confirmed list of the first-half 2011 Government Land Sales (GLS) Programme is being halved from H2 2010. And the government did not include a site for office development in the Marina Bay area in the H1 2011 list that some developers and consultants had asked for.

The earliest that land will be offered through the GLS Programme in Marina Bay, where offices are being highly sought after by banks, will be around 2013, when infrastructure works in the vicinity begin to be completed.

However, Urban Redevelopment Authority (URA) group director (land sales and administration group) Marc Boey highlighted that in the meantime, about 341,000 square metres of gross floor area (GFA), part of which will be for office use, will be generated from the four plots in the location that will be jointly developed by the Khazanah-Temasek partnership, M+S Pte Ltd. The plots are slated to be vested in M+S next year.

Another two parcels in the Ophir/Rochor area to be vested in M+S will produce a further GFA of about 160,000 sq m.

Hence there is a need to space out the future release of sites and pace of development in Marina Bay as in the past, URA officials stressed.

Explaining the drop in commercial land supply in H1 2011, Mr Boey said that ‘for 2010 itself, we have already injected quite a large supply of office developments’ – including the Jurong Gateway, Buona Vista and Tanjong Pagar sites.

Following that, the Ministry of National Development (MND) is offering two relatively small commercial plots on the H1 2011 confirmed list – at Cecil Street (a plot beside Capital Tower currently used as a park) and next to Paya Lebar MRT Station – that will have minimum office components. The H1 2011 confirmed list can generate a total commercial GFA of 98,120 sq m – about half the 184,240 sq m supply in the current half’s confirmed list.

In addition, MND will introduce a new commercial plot on the reserve list, also near Paya Lebar MRT Station, that will have minimum office and hotel components. That along with other reserve list plots for H1 2011 can produce about 219,740 sq m commercial space, close to the 215,590 sq m from the H2 2010 reserve list.

URA officials yesterday also highlighted the government’s strategy of releasing land for office development in a diverse range of locations including Tanjong Pagar in the old CBD, Buona Vista, and the regional commercial hubs earmarked around Paya Lebar and Jurong East MRT stations to create a range of options for occupiers with different budgets.

It will only be from 2013 onwards that MND will start releasing land in Marina Bay through the GLS Programme as infrastructure works in the area begin to be completed – such as construction of the Downtown Line, extension of the North-South Line and the Common Services Tunnel network.

URA officials highlighted 11 plots near Marina Bay Financial Centre (MBFC) and Asia Square that will be made available for development in phases from 2013 onwards.

‘The actual schedule for release of the land parcels will be dependent on market conditions and demand at that point in time,’ said URA’s director (urban planning) Andrew Fassam.

The plots may be tendered out individually or amalgamated with adjacent sites to allow for development of a mixed-use complex. The 11 plots, zoned white, can generate a total GFA of about 1.75 million sq m – equivalent to four MBFCs.

URA also spotlighted the substantial office supply in the pipeline, of about 887,000 sq m (GFA), or about 9.5 million sq ft – of which 8.2 million sq ft will be completed from Q4 2010 to 2013 and is mostly in the prime CBD including Marina Bay.

While some market watchers worry about a shortage of offices from 2014, URA officials suggest that supply from the Cecil Street and Paya Lebar plots to be sold in H1 2011 as well as the plots at Jurong East, Buona Vista and Tanjong Pagar awarded this year could potentially translate into some new office completions from 2014 onwards. And the South Beach project, which includes offices, is expected to be completed in 2015.

Jones Lang LaSalle’s head of markets Chris Archibold reckons GuocoLand’s Tanjong Pagar project will likely be completed around 2015, and the Marina Bay plots that will be developed by M+S Pte Ltd could start to be completed around 2015 or 2016. ‘So that leaves maybe a year’s gap, in 2014,’ he added.

He agreed with MND’s strategy to supply office space in older CBD locations such as Tanjong Pagar and Cecil Street as it will appeal to cost-conscious tenants as well as banks for their backoffice functions. ‘But if they offer another site in Marina Bay now, it will be taken up. There’s a lot of confidence. If you speak to corporate real estate guys from major MNCs and especially banks, they’re all looking at expansion again.’

‘Maybe they should keep under review the topic of when to release the next plot at Marina Bay according to market needs, instead of saying it will be from 2013 onwards,’ he suggested.

Another observer said: ‘I think they probably want to clear the path for M+S, and give them some breathing room to get organised, get some tenants, before releasing more sites in Marina Bay.’

Source: Business Times, 26 Nov 2010

THE booming housing market has led the Government to roll out enough land sites to accommodate a record-breaking number of new private homes.

If all the plots were taken up, developers could build at least 14,310 new homes, the Ministry of National Development (MND) said yesterday in unveiling the land sales programme for the first half of next year.

This beats the most recent release of residential land in the second half of this year, which could have yielded 13,905 homes – itself a record.

In all, the Government has lined up 31 sites that can be used for homes. And in what some consultants have called an ‘aggressive stance’, 17 of the sites have been placed on the confirmed list, with at least two sites to be released every month in the first half of next year.

The other 14 sites are on the reserve list. Confirmed list sites go on sale regardless of interest, while land on the reserve list is put up for tender only if developers table an acceptable initial offer.

Most of the residential sites on the confirmed list are new – 14 out of 17 – but only three on the reserve list are new. The rest are rolled over from the current government land sales programme.

The new sites are located mainly in suburban areas such as Punggol, Woodlands and Pasir Ris, to address the strong demand that has emerged for mass market private housing.

Four new executive condominium (EC) plots have also been added to the line-up – in Tampines, Choa Chu Kang, Punggol and Upper Serangoon.

Experts said the new supply should meet demand for more housing choice and stem further rises in mass-market condominium unit prices.

DTZ South-East Asia’s research head, Ms Chua Chor Hoon, said a substantial number of units could be expected to be completed in a few years if developers soaked up the supply.

This, however, might lead to oversupply: ‘too many units chasing after a smaller pool of occupants’ if Western economies do not pick up by then and global growth is weak, she said.

Dr Chua Yang Liang, research head at Jones Lang LaSalle, noted that many of the new sites were placed on the confirmed rather than the reserve list.

‘The more aggressive stance taken by the state to continue to flood the market with supply signals the serious implications of asset inflation,’ he said.

He also offered a word of caution over a potential ‘supply overhang’.

But Mr Liew Mun Leong, president and chief executive of property giant CapitaLand, said at a separate event yesterday that he did not think home prices would be depressed, even with this bumper supply of land.

‘First and foremost, demand is still there. Developers still want to buy and get their inventories built up,’ he said.

Mr Ong Kah Seng, Cushman and Wakefield senior manager of Asia-Pacific research, said the four EC sites – three of which are on the confirmed list – showed the Government’s intent to continue helping the ‘sandwich class’ – those with monthly household incomes between $8,000 and $10,000.

However, he warned that interest for these sites may not be overwhelming as a few EC projects are already slated for launch next year. One such site put up for sale by the government in Jurong West recently did not receive any bids.

The MND will also launch more commercial sites to meet demand for office space. It will release one site each at Paya Lebar Road and Robinson Road on the confirmed list that can yield an estimated 92,120 sq m of commercial space.

The Paya Lebar site was originally on the reserve list but has been moved to the confirmed list to facilitate the early development of Paya Lebar Central into a commercial hub, the Ministry said.

A commercial site at the corner of Sims Avenue and Tanjong Katong Road will be added to the reserve list too, to provide for growth in the area.

Source: Straits Times, 26 Nov 2010

Bumper offering of residential sites over coming months; MAS keeping eye on property market situation

(SINGAPORE) Singapore stands ready to take more steps to cool the property market and will roll out another bumper supply of land for new residential projects for the first half of 2011, government agencies said yesterday.

There is ‘a possibility’ that property transactions and prices could pick up again given the current global conditions of ample liquidity and low interest rates, said the Monetary Authority of Singapore (MAS) in its Financial Stability Review report.

But MAS conceded that the Aug 30 anti-speculation measures appear to have dampened activity in the private residential property market ‘somewhat’.

The government will adopt additional measures if necessary, MAS added.

Tackling the supply side of the equation, the Ministry of National Development (MND) said it will release a large supply of land for new homes in H1 2011 as demand from both developers and homeowners remains robust.

A total of 17 residential sites, with a potential 8,100 private and executive condominium units, will be offered under the confirmed list of MND’s Government Land Sales (GLS) Programme for H1 2011. This is close to the record 8,135 units offered under confirmed list sites in H2 2010.

More than half of the new sites are located close to plots sold earlier this year in government land tenders or are near popular property launches. But MND said that the sites were not selected with the intention of dampening prices at neighbouring developments.

‘Demand for private housing remained strong for the first 10 months of 2010 because of Singapore’s strong economic performance,’ said Marc Boey, group director for land sales and administration at the Urban Redevelopment Authority, an MND unit. ‘In response to the strong demand, developers have continued to acquire land for private housing development from the second-half 2010 GLS Programme.’

Developers sold about 13,600 private homes (including about 530 executive condo units) in the first 10 months of the year. This is comparable to what was sold over the same period last year.

Major developers including CapitaLand, Hong Leong Group and Keppel Land said that they welcomed the release of more sites and predicted that prices will hold.

‘I do not think the GLS will depress prices,’ said CapitaLand chief executive Liew Mun Leong, who was speaking at a property launch. ‘Demand is still heavy. Developers want to get their inventory built up.’

But some market players raised concerns of oversupply just as the H2 2010 GLS Programme was unveiled in May this year.

‘Developers are still bidding for sites and bid prices have not fallen much. So the government continues to flood the market with supply. It might be too much,’ said one developer.

DTZ’s South-east Asia research head Chua Chor Hoon said that if developers soak up the supply, there will be a substantial number of units which will be completed in a few years’ time.

‘If the Western economies do not pick up by then and global growth is not strong, there may be a problem of too many units chasing after a smaller pool of occupants,’ Ms Chua warned. ‘On the other hand, if the Western economies recover, interest rates will start to rise which will also curtail buying demand, which is currently fuelled by the low interest rates.’

Teo Hong Lim, chief executive of Roxy-Pacific Holdings, pointed out that sites sold through government land tenders are still more attractive than those bought from the private sector through treaties and collective sale tenders.

Including reserve list sites, the H1 2011 GLS Programme will have a total of 30 sites which can generate about 14,300 residential units. This is higher than the 13,900 residential units offered for the second half of 2010.

The increase is due mainly to an increase in the reserve list supply from about 5,800 units in H2 2010 to 6,200 units in the first half of 2011.

Across all sectors, the H1 2011 GLS Programme comprises 19 confirmed list sites and 25 reserve list sites. There will be 28 residential sites, five commercial sites, two commercial & residential sites, one ‘white’ site and eight hotel sites.

These sites can potentially yield about 14,300 private homes, 318,000 square metres of commercial gross floor area and 3,700 hotel rooms.

Home sales in Singapore declined in September following the latest round of anti-speculation measures. But sales of new private homes picked up again in October. The private property price index moderated somewhat in Q3 2010.

But views from market contacts appear mixed, said MAS, with some buyers staying on the sidelines in the hope of price declines and others expecting transaction volumes to pick up again next year.

MAS also warned that expectations of a sustained period of low interest rates may affect the borrowing decisions of individuals and encourage buyers to take on excessive leverage. And financial institutions may also be tempted to loosen lending standards in a bid to extend more loans in the face of thinning interest margins.

Source: Business Times, 26 Nov 2010

As caution sets in, the difference between winning bids and the rest starts to narrow

(SINGAPORE) Developers looking to build homes are no longer bidding with wild abandon at Government Land Sale tenders as the impact of the property cooling measures kicks in.

This can be gauged from the fact that the gap between the top bidder and next highest bid for residential sites and sites with residential components has started to narrow.

The gap peaked in August and early September before declining in recent weeks as the impact of the Aug 30 measures gradually took effect, according to an analysis by Jones Lang LaSalle.

The gap (measured by the difference between the top two bids divided by the second highest bid) peaked at 31 per cent for the condo plot at Miltonia Close next to Orchid Country Club in the Yishun area offered at a tender which closed in August.

Another tender that closed on Sept 1, a residential-commercial plot next to Bedok MRT Station, also saw a relatively high winning margin of 21 per cent.

The trend persisted into early September, with a tender for a condo plot at Jalan Eunos/Foo Kim Lin Road drawing a 26 per cent winning margin from top bidder Far East Organization when it closed on Sept 7.

Since then, the margin has slipped to single-digit per cent levels, mostly between one and 4 per cent. Between Jan 1 and July 31 this year, the winning margin ranged from one to 17 per cent, with the 17 per cent premium paid by a Far East Organization-Frasers Centrepoint tie-up for a private condo plot at Yishun Ave 2/Canberra Drive offered at a tender which closed in June.

Market watchers suggest that the margin being at its widest in August and early September reflected the bullish sentiment prevailing in the property market at the time that led the government to rein in the market on Aug 30.

JLL’s South-east Asia research head Chua Yang Liang says: ‘The trend of thinner winning margins reflects a more cautious stance by developers as a result of the latest anti-speculative measures.’

When the market is bullish, a more optimistic developer may be willing to pay a higher premium than its competitors.

But when developers turn conservative, there tends to be a greater consensus of views, including on land price, he added.

Knight Frank chairman Tan Tiong Cheng said that the wide spread between the top two bids at land tenders back in August and early September reflected a divergence in views among developers.

‘Some were bullish while others were less so. Then came the Aug 30 measures and developers became more circumspect. Everybody seems to have become more careful, translating to less divergence in their market views and hence a much smaller winning margin at more recent tenders.’

Agreeing, DTZ executive director (consulting) Ong Choon Fah said: ‘Sentiment was generally bullish in August but there was also a lot of ‘noise’.

‘People read the market differently as some were concerned about the government coming up with more steps to cool the property market. Since the government announced the measures, there is less uncertainty and hence greater consensus of views.’

Knight Frank’s Mr Tan says that another reason that winning bidders at state tenders have been less aggressive of late is that the Aug 30 measures were thought to have a greater impact on the upgrader market and the sites on the government land sales programme are mostly in this market segment.

Mrs Ong reckons that the trend of a narrow winning margin could continue in the near future, but some sites will be hotly contested and their winning margins could again widen – for instance, smallish plots, as these will draw a bigger pool of contenders including boutique developers.

Close to 14,000 private homes (including executive condominiums) are estimated to be generated from sites sold and to be sold under the government land sale programme this year.

This figure includes 9,790 units that can be built on sites sold so far this year, and 3,470 units on seven sites that are pending – either the tenders have yet to close or have yet to be awarded.

In addition, a site in Punggol Walk/Central that can be developed into 685 homes will be launched later this month.

Source: Business Times, 9 Nov 2010

PROPERTY giant Far East Organization has emerged as the top bidder for a 99-year-leasehold private housing plot at Woodgrove Avenue in the Woodlands area. Its top bid of $105.12 million works out to about $333 per square foot (psf) of potential gross floor area – about 4.2 per cent higher than the next highest bid of about $100.90 million by EL Development.

The state tender drew six bids.

Far East is planning to develop a five-storey condo incorporating some townhouses on the site.

‘Tenders for average suburban housing sites seem to have settled into a predictable pattern in terms of bid and price response. The top bids for such plots at the past four state tenders have been consistently in the $330-350 per square foot per plot ratio (psf ppr) range,’ observes Credo Real Estate executive director Ong Teck Hui.

‘The highest bidders seem to be sharing similar sentiments of a rather flat market going forward,’ he added.

CBRE Research executive director Li Hiaw Ho estimates that Far East’s bid price would translate to a likely breakeven cost of about $650-700 psf. ‘The project will likely be launched above $800 psf,’ he added.

He noted that in the subsale market, units in the low-rise Rosewood Suites (under construction) were sold at $650-700 psf in the July-September period. In the secondary market, units in Woodgrove Condominium (also a low-rise project) changed hands at $560-675 psf while those in the Casablanca and Rosewood condo (these are mid-rise developments) were sold at $620-750 psf over the same period.

The site whose tender closed yesterday is a stone’s throw from the Singapore Sports School and about 1km from the Singapore American School. It is also nearly 700m from Woodlands MRT Station. Mr Li said the fact that the site managed to draw six bids shows that developers are fairly confident about this site as demand is likely to come from potential HDB upgraders as well as investors who want to tap the expatriate market.

The other four bidders yesterday were TID Residential ($95.4 million), BS Capital’s Bishopsgate Development ($86.28 million), Sim Lian ($86 million) and Ecco Development ($73 million or $231.16 psf ppr).

Far East executive director (development and planning) Chng Kiong Huat said: ‘We envisage a five-storey condominium development that will incorporate some townhouses, designed to complement the low-rise set-up. Buyers will have a choice of one to four-bedroom units and townhouses which will come with private terraces, roof gardens and dedicated car park lots.

‘This is an area that Far East Organization is familiar with, having developed a number of successful themed residential projects there such as Casablanca and La Casa executive condominium as well as a collection of New England-style houses within Woodgrove Estate popular with American expats with children attending the Singapore American School next to it.’

Source: Business Times, 5 Nov 2010