All tender offers exceed $5m reserve price; top bid hits $12.1m

A LAND parcel suitable for industrial use in the Kaki Bukit area has drawn a record number of bids.

The 115,342 sq ft plot in Kaki Bukit Road 2 was launched for public tender on July 14 after an unnamed party submitted an application bid of $5 million, or $43 per square foot per plot ratio (psf ppr).

Bidding ended yesterday with 18 offers on the table, all of them exceeding the reserve price of $5 million. This is the highest number of bids ever received for an industrial site, according to the Urban Redevelopment Authority (URA).

Previously, the highest number received was 14, for an industrial plot in Commonwealth Drive in November 2007.

The top bid of $12.1 million for the 30-year leasehold site at Kaki Bukit – zoned as a Business 2 development for a range of clean, light and general industrial uses – was made by privately held Kng Development.

This translates to a unit land price of $105 psf ppr and is 16.5 per cent more than the second-highest bid of $90 psf ppr submitted by the trio of Lee Siaw Ling, Low Khoon Huat and Ang Lai Huat.

It is also 142 per cent ahead of the application bid and beats the $72 psf ppr that Eastpoint Development paid for a 30-year leasehold industrial site along Kaki Bukit Road 3 in August 2007.

Mr Lim Kien Kim, Knight Frank’s head of business space (industrial), said the site drew a lot of interest as Business 2 sites are usually situated farther out in Tuas or Changi, and it is ‘very difficult to find a Business 2 site in the Kaki Bukit area’, which is considered more prime.

Mr Li Hiaw Ho, executive director of CBRE Research, said the response reflected the improving business sentiment.

‘The top six bids of above $75 psf ppr could be reflective of the bidders’ expectation that Singapore’s manufacturing sector will improve in the near future,’ he said. He noted that although Singapore’s economy was still shrinking, the pace of decline had slowed.

‘After eight months of contraction, the Purchasing Managers’ Index moved above the important 50.0 benchmark in May, indicating growth in the manufacturing sector. The index has since remained above the benchmark,’ he said.

Mr Tan Boon Leong, director of industrial sales at Colliers International, pointed out that the site is attractive to ‘a wide variety of end-users and a whole spectrum of industrialists’ because it is located in a mature industrial estate and has Business 2 zoning.

‘Moreover, it’s quite small, so in terms of quantum it’s very affordable. The level of interest goes to show or confirm that the economy seems to be turning from its lowest point now,’ he said.

The tender has not yet been awarded to any of the bidders. A final decision on the award will be made after the bids have been fully evaluated, said the URA.

Source: Straits Times, 13 Aug 2009

(SINGAPORE) An industrial site along Kaki Bukit Road 2, put up for sale by the government, drew an impressive 18 bids by the close of tender yesterday.

The Urban Redevelopment Authority (URA) said that the highest bid received for the 30-year leasehold site was $12.1 million, more than double the minimum bid price of $5 million.

That highest bid, which works out to just under $105 per square foot per plot ratio (psf ppr), was placed by Kng Development, whose shareholders include Ng Teng Yeng, brother of property tycoon Ng Teng Fong; Kim Chan Wah and Ng Hock Lye.

Kng’s bid is 16.5 per cent above the second highest bid of $10.4 million, or $90 psf ppr, submitted by Lee Siaw Ling, Low Khoon Huat and Ang Lai Huat.

It is also higher than the $72 psf ppr which Eastpoint Development paid for a 30-year leasehold industrial site along Kaki Bukit Road 3 in August 2007.

This latest site, offered from the government’s reserve list, has an area of 1.07 ha and a gross plot ratio of one. CBRE Research says that the breakeven cost for Kng Development is likely to be $250 psf.

‘The robust response to the tender reflects the prevailing improving business sentiment,’ said Li Hiaw Ho, executive director at CBRE Research.

He noted that the top six bids were all above $75 psf ppr and ‘could be reflective of the bidder’s expectations that Singapore’s manufacturing sector will improve in the near future’.

Colliers International director (industrial) Tan Boon Leong said that the large number of bids received was not surprising as the ‘quantum amount is small’.

He thinks that the good response reflects greater confidence in the economy, as well as the fact that the plot lies within a mature industrial estate and is zoned for a Business 2 development, which means that it can be developed for a range of clean, light and general industrial uses.

Mr Tan also said that some of the bids were placed by contractor developers ‘who are probably more competent in judging their construction costs, and with prior experience, may thus be bolder when it comes to putting in bids’.

URA’s decision on the award of the tender will be made after the bids have been evaluated, and disclosed at a later date.

Source: Business Times, 13 Aug 2009