Moderate bids likely for 2 Serangoon sites

[reporter2]

http://www.straitstimes.com/premium/money/story/moderate-bids-likely-2-serangoon-sites-20131001

Moderate bids likely for 2 Serangoon sites

Published on Oct 01, 2013


TWO residential sites overlooking the Sungei Serangoon river and Serangoon Park Connector with bids closing on the same day were released yesterday.

Experts expect moderate interest under the Urban Redevelopment Authority's new batched tender system, which was introduced in an attempt to moderate bids from developers.

Both sites in Upper Serangoon View have a 99-year lease and are on the confirmed list of the Government Land Sales programme for this half of the year.

Knight Frank research head Alice Tan said developers will be measured in their bids as the tenders for both plots close on the same day. Developers will also have to compete for buyers as the projects on adjacent sites are expected to launch at the same time.

A steady supply of new homes in the vicinity will hit the market over the next four years, she said.

There are eight private condominium projects in the vicinity able to yield 4,840 units and three executive condominium projects with a total of 1,507 homes.

"Given the high number of units to be completed in the next three years, any new demand that could potentially arise for the new units on these two sites remains to be tested," said Ms Tan.

Some developers might also attempt to secure both sites at once to beat the competition, added SLP International research head Nicholas Mak. But as the plots can yield about 900 units in total, only the bigger players might attempt this.

R'ST Research director Ong Kah Seng cautioned that loan curbs have moderated buying interest in the private residential market. This raises the risks for a developer acquiring both sites on top of the huge financing required for such a project.

Bids of $450 to $480 per sq ft (psf) per plot ratio (ppr) can be expected, with between four and six bidders for each site, said Ms Tan. This works out to be about $240 million for Parcel A, which has a site area of 165,141 sq ft, and $180 million for the 128,663 sq ft Parcel B. Units are expected to sell for $950 to $1,000 psf.

Experts also said that buyers who prefer peace and quiet will be drawn to developments which have the river and park connector close by. Nearby amenities include Hougang Mall, Hougang MRT station and schools like Holy Innocents' Primary and Montfort Secondary. The tenders for both sites close on Nov 28.

CHERYL ONG

[reporter2]

http://www.businesstimes.com.sg/specials/property/2-adjoining-sites-upper-serangoon-view-tender-20131001

Published October 01, 2013

2 adjoining sites in Upper Serangoon View up for tender

99-year leasehold sites to generate total of 920 homes

By Kalpana Rashiwala [email protected]


[SINGAPORE] The government has released two adjoining private housing sites in Upper Serangoon View fronting Sungei Serangoon for tender, the first under the second-half 2013 confirmed list.

Located about one kilometre from the Hougang MRT Station, the 99-year leasehold sites are estimated to generate a total of 920 homes.

Tenders for both sites will close on the same day on Nov 28, as "part of the Government's initiative to encourage more prudent bidding", Urban Redevelopment Authority said. Another pair of adjacent sites - in Choa Chua Kang Grove for executive condo development - are slated for release in December.

While some property consultants expect land-hungry developers to drive up interest and winning bids for the Upper Serangoon View sites, others suggest developers may be cautious and weigh demand first in this micromarket given the slew of launches in recent years.

Parcel A along Upper Serangoon View, with a land area of nearly 165,141 sq ft next to the Rio Vista condo, is estimated to yield about 510 homes. The 128,663 sq ft Parcel B next door could yield about 410 units. Both have a 3.0 plot ratio (ratio of maximum gross floor area to land area).

Property consultants' forecasts of top bids for the two sites range from $450-530 per square foot per plot ratio (psf ppr).

Knight Frank Singapore's research head, Alice Tan, is making a "conservative forecast" of a winning bid of around $450-480 psf ppr, which would translate to an expected average selling price of around $950-1,000 psf for the new projects on the sites.

She expects four to six bids for each site, "with stronger interest from niche developers, for example, smaller players teaming up to form consortiums".

Besides the general air of caution following the implementation of the Total Debt Servicing Ratio (TDSR) framework in late-June, Ms Tan reckons that developers will bear in mind that there are currently eight private housing projects being built within a two-kilometre radius of the two sites. Although 85 per cent of the total 4,840 units from these eight projects have already been sold, there is a potential overhang in the rental market as these projects get completed over the next two to three years.

"Moreover, demand for private homes in this micro-market, which includes Sengkang, Buangkok and Hougang, may already have been served by these earlier launches. So the question is whether there will be sufficient additional demand to absorb the new projects on the two sites," she adds.

SLP International executive director Nicholas Mak reckons each site could draw five to 10 bids, with the winning bids likely to be around $470-530 psf ppr. Given the substantial investment involved in the sites - assuming a bid of $470 psf ppr, Parcel A would cost $232.9 million and Parcel B around $181.4 million - "only the bigger developers would attempt to bid aggressively for both sites".

CBRE executive director (residential) Joseph Tan forecasts winning bids for each site are likely to be in the $450-500 psf ppr range. He notes that recent transactions for neighbouring projects under construction have been around $900-950 psf. "We expect a healthy response to the sites, fuelled largely by developers' depleting suburban land bank. Each site should be able to attract six bids or more, going by the response to the suburban plot in Tampines Avenue 10, which received 10 bids in July."

Market watchers note that the two Upper Serangoon View sites were released on the last day of the scheduled month of launch in September. The sites are the first private housing sites on the government's confirmed list to be launched on the H2 2013 slate. The rest will be launched mostly in November and December.

The authorities could be hoping that timing the site launches closer towards year-end, when more private housing completions are expected, could have a moderating impact on the property market.

"As more supply gets completed, it may have a dampening impact on the rental market. In turn, this could have a sobering impact on new project launches as well as developers' bids for new sites," suggests an industry observer.

Knight Frank's Ms Tan suggests that "it appears that the Government is starting to taper supply of new private housing sites, especially those near MRT stations". "This could be due to the impending high supply of private homes to be completed in the next three years, not forgetting the unprecedented new supply of HDB Build-to-Order flats being completed around the same time."

[081828]

When the site next to Q Bay was put up for sale, analysts also said the same thing "...moderate bids". It will be interesting to see the final bid results.