http://www.businesstimes.com.sg/archive/wednesday/premium/singapore/canberra-ec-bids-reveal-touch-caution-20140129
Published January 29, 2014
Canberra EC bids reveal a touch of caution
By ong chor hao
[email protected]
DEVELOPERS are showing greater caution in bidding for executive condominium (EC) sites, analysts say, after a tender for a 99-year leasehold site at Canberra Drive closed yesterday.
A joint venture between Verwood Holdings, a unit of City Developments, and TID Residential made the highest offer out of six bidders for the 2.86-hectare site, which is near Sembawang Shopping Centre and about 1.2 kilometres from Sembawang MRT station.
Its bid of $226 million, or $350.04 per square foot per plot ratio (psf ppr) was 4.4 per cent higher than the second highest offer of $216.5 million, or $335.33 psf ppr, from MCL Land (Brighton).
The top bid was in line with earlier analyst estimates of between $320 and $380 psf ppr.
Consultants noted that the $350.04 psf ppr mark was lower than the winning offer of $381.81 psf ppr for an EC site at Westwood Avenue in Jurong West earlier this month.
They also noted that 12 bidders took part in the tender for the Westwood Avenue site, versus just six for Canberra Drive.
Ong Teck Hui, national director for research and consultancy at Jones Lang LaSalle, believes that the broad easing reflected in the Urban Redevelopment Authority's latest statistics may have led to a re-assessment of the EC market by developers.
"If private residential prices are expected to soften, then prices of new ECs cannot be as optimistic as before as a comfortable gap has to be maintained between EC and private residential prices for ECs to be saleable," he said.
The last EC tender in Sembawang was for the plot where SkyPark Residences is developed, which fetched $324 psf ppr in December 2012. That project launched last November and sold for a median price of $791 psf in December, going by URA data.
Tweaks to the EC market last month were also a reason for the more subdued bidding, analysts say, particularly the imposition of a mortgage servicing ratio capped at 30 per cent for EC housing loans from financial institutions for units bought directly from developers.
Said Desmond Sim, head of CBRE Research Singapore: "Developers appear to be more realistic, bearing in mind the new credit restrictions imposed on EC buyers, which can only be made up of Singaporeans."
He noted the narrow divergences in yesterday's tender closing. Verwood Holdings and TID Residential's bid was just 38 per cent higher than the lowest offer of $163.4 million, or $253.05 psf ppr, from CEL Residential Development.
By comparison, the gap between the highest and lowest offer for the Westwood Avenue site was about 112 per cent.
Ong Kah Seng, director at R'ST Research, expects average selling prices for ECs launched from this year to come down to around $750 psf from the $800 psf mark for the second half of last year, as developers move to match the capped spending power of buyers.
That said, analysts believe developers remain confident about buyer demand. Eugene Lim, key executive officer of ERA Realty, added that they still have "a string of EC land sites to choose from" in the first half of the year in Yishun, Sembawang and Chua Chu Kang.
A CDL spokesman said: "Given the popularity of ECs in Singapore and the site's convenient access to Sembawang MRT station and amenities, we expect this development to be well received."
It plans to explore a mid-rise EC development of between 10 and 11 storeys with approximately 660 units if awarded the site.