http://www.businesstimes.com.sg/real-estate/tanah-merah-site-triggered-for-tender
Tanah Merah site triggered for tender
Successful applicant commits to S$580 psf ppr minimum bid; analysts expect developers to apply for more reserve list sites in next few months due to depleting landbanks
By Kalpana Rashiwala
[email protected]
@KalpanaBT
Jan 8, 2016
JUST three weeks after the Ministry of National Development announced the Government Land Sales Programme for first-half 2016, a private housing site near Tanah Merah MRT Station has been triggered from MND's reserve list.
Market watchers say this reflects developers' hunger for land, their vital raw material, amid a depletion in their landbanks. "There are so few sites on the confirmed list, but business has to go on for developers," commented JLL national director Ong Teck Hui. "I would not be surprised if more sites are triggered for launch from the reserve list given that there are only four sites on the confirmed list for this half."
While confirmed-list sites are launched according to schedule regardless of demand, sites on the reserve list are launched for tender only upon successful application by a developer.
On Thursday, the Urban Redevelopment Authority announced that a successful application has been made for a 2.4 hectare plot at the corner of New Upper Changi Road and Bedok South Avenue 3. The 99-year leasehold site can yield about 570 private homes. URA will launch the tender for the site in about two weeks.
URA did not name the developer that made the successful application but said it has committed to bid at least S$320 million for the site at tender. This works out to about S$580 per square foot of potential gross floor area.
This would be the fourth 99-year leasehold private housing site to be launched by the state in the locale since 2012. The three earlier sites are being developed into eCO, Urban Vista and The Glades condos. All three sites were sold in 2012 and the projects on them were launched between 2012 and 2013.
The Glades, which was released in September 2013, had a substantial 363 units still available for sale as at end-November 2015, of which 37 units have been launched but unsold and 326 units yet to be launched. The project's developers, Keppel Land and China Vanke, have released 400 of the project's 726 units.
Prospective bidders, in casting their bids for the latest site, would be mindful of this substantial yet-to-be- sold inventory at The Glades, noted Wong Xian Yang, senior manager, research and consultancy, at OrangeTee.com. "Moreover, there is the possibility of future competition, given that there are two empty plots of land adjacent to the Tanah Merah MRT Station," he added.
Based on a poll of three property consultants, the site just triggered is expected to garner anywhere from three to 12 bids; the top bid is forecast to come in the S$600-750 per square foot per plot ratio (psf ppr) range. A fourth consultant, Eugene Lim of ERA, reckons the winning bid could be as high as S$850 psf ppr.
JLL's Mr Ong said that based on his S$600-700 psf ppr forecast for the winning bid, the breakeven cost would be around S$1,100-1,200 psf.
By some analysts' reckoning, the new project may have better sales take-up if it is priced on average around S$1,300 psf.
Mr Wong of OrangeTee.com noted that based on data from URA Realis, 100 units were transacted last year at The Glades - at a median price of S$1,439 psf.
The last government residential land sale in the vicinity was that of The Glades site, in October 2012. It drew 11 bids, the highest at S$791 psf ppr - at a time when market conditions were more buoyant, noted Mr Ong of JLL. The key attractions of the latest site are its proximity to the MRT station and its location in a popular and established suburban residential enclave, he added.
R'ST Research director Ong Kah Seng added: "The Tanah Merah area has a fairly upmarket residential enclave positioning, and is felt to be quieter compared with the typical 'fairly crowded' HDB estates (Tampines, Bedok and Pasir Ris) nearby. Hence investors would be keen in buying a property in the Tanah Merah location, as expat tenants would prefer to rent a condo (or room) in such a niche residential area. "
CBRE Research's head of Singapore and South East Asia, Desmond Sim, said: "The winner of this site will have the advantage of time to ride out current pressure and bank on a possible market recovery."
Analysts said they would not be surprised if more sites are triggered from the state's reserve list in the next few months. SLP executive director Nicholas Mak tips the private condo site along Margaret Drive as the most likely candidate. "It is located about 500 metres from both the Commonwealth and Queenstown MRT stations on the popular East-West Line. At 0.48 ha and estimated to yield 275 homes, this is a relatively small site that will appeal to medium-sized and larger developers."
JLL's Mr Ong said: "Competition for sites among developers will keep land prices stable - despite the current soft market for new private home sales compared to their heyday."
http://www.businesstimes.com.sg/sites/default/files/styles/article_img/public/image/2016/01/08/BT_20160108_KRRESERVEFINAL_2056514.jpg?itok=xD69SBB9