Solitary, low bid for Tampines site

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Published August 13, 2008

Solitary, low bid for Tampines site

At $118 psf ppr it is below expectations, but analyst says site is not plum anyway

By KALPANA RASHIWALA

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(SINGAPORE) Cautious sentiment, soaring construction costs and a not-so-hot site all combined to yield just one bid at a state tender yesterday for a 99-year leasehold condo site at Tampines Ave 1/Ave 10 facing Bedok Reservoir.

The sole bid of about $118 per square foot per plot ratio (psf ppr) was below general market expectations which ranged from $150 to $230 psf ppr.

The sole bidder at yesterday's tender was Boon Keng Development, a unit of Midview group, which is involved in the construction and property businesses.

Most property consultants reckon there's only a slim chance of the site being awarded.

Looking at the $118 psf ppr sole bid at yesterday's tender, property consultants told BT that no 99- year leasehold condo/ apartment site has been sold at a lower price than this since 1991.

Yesterday's top bid, which was for a private condominium site, was also below the $137 psf ppr at which the government sold a Design, Build and Sell Scheme site in Simei for development into Housing & Development Board flats in June.

'This outcome is negative for property market sentiment. It may be even worse for sentiment if the government actually awards the site as that could affect land valuations for other residential sites too,' Knight Frank director (research and consultancy) Nicholas Mak said.

However, Savills Singapore director (marketing and business development) Ku Swee Yong noted that the Tampines site was not a plum one to begin with.

'It does not have good attributes in terms of transportation links. Neither is it near major amenities,' he said.

'Generally, developers already have good landbanks, so unless a very good site comes along, we'll not see too much participation,' Mr Ku said.

'But if a site with solid transportation connection and amenities comes up, like the Ophir Road white site or the condo plot next to Tanah Merah MRT station, these will be attention grabbers,' he added.

The tender for the Tanah Merah plot closes on Sept 9 while that for the Ophir Road plot closes in December.

The $118 psf ppr bid for the Tampines plot, plus construction costs of about $320-350 psf of gross floor area, reflects a breakeven cost of about $500-550 psf for a new condo project.

Units in completed condos around the Bedok Reservoir area have been selling at between $550 psf and $680 psf, although the new Waterfront Waves condo which is being built on a choice spot along the reservoir has achieved average prices of about $750 psf for pool-facing units and $800 psf for reservoir-facing units.

The latest plot on Tampines Ave 1/Ave 10 can be built into a condo with about 650 units. It was offered through the confirmed list of the Government Land Sales Programme.

Debating the likelihood of the plot being awarded, a property consultant who declined to be named said: 'There was just one bid. But I hope the government will award this site if it wants to show foreign investors that Singapore is a competitive place to invest in.'

Knight Frank's Mr Mak said that the government will gradually lower reserve prices for sites offered through the Government Land Sales Programme, to take into account rising construction costs and weak property market sentiment.

'It's walking on a tight rope. The government can't trim reserve prices too much as that may send a negative signal to the market; besides it also has to protect the nation's reserves. But on the other hand, if the reserve prices are maintained too high and sites can't be awarded at state tenders, the government may not be able to ensure a steady state of supply to avoid busts and booms in the property market,' Mr Mak said.

http://www.straitstimes.com/Money/St...ry_267399.html

August 13, 2008 Wednesday

Just one bid for Tampines condo site

By Joyce Teo, Property Correspondent


THE property slowdown was clear for all to see yesterday when the tender for a condo site overlooking Bedok Reservoir closed with just one bid - and at a price well below expectations.

The Urban Redevelopment Authority (URA) will likely refuse to award the 3.2ha site, given the poor offer, consultants said.

Boon Keng Development bid $84.6 million, or $118 per sq ft (psf), for the 99-year leasehold site but consultants had expected anything from $150 to $230 psf.

Apartments on the site could sell for up to $700 psf, they said.

If Boon Keng does secure the site at the junction of Tampines Avenues 1 and 10, its break-even would be about $480 to $500 psf. It would then be able to sell the apartments for around $600 psf, said Knight Frank's director of research and consultancy, Mr Nicholas Mak. But he does not expect the URA to sell the land at such a low price.

The increasingly cautious mood among developers explains why the site drew only one bid.

'If this site was not on the confirmed list, it may not be triggered for tender,' said Mr Mak.

Confirmed list sites are tendered out at pre-determined dates regardless of whether developers have shown interest.

'If confirmed list sites were launched for tender in an increasingly uncertain market, they would attract opportunistic bids, such as the one we witnessed today,' said Mr Mak.

Savills Singapore's director of business development and marketing, Mr Ku Swee Yong, who had tipped bids of $150 to $180 psf for the site, said: 'Most developers have ample land, so unless a choice plot is available, they won't bid.'

Rising building costs are forcing developers to look for cheaper land. In such a climate, the Government has to decide whether to lower reserve prices to ensure a steady supply of mass-market private housing, or maintain the value of plots on the sales list as they form part of the nation's reserve, said Mr Mak.

He does not expect any residential site on the government sales list to be triggered for tender unless reserve prices are lowered. If not, there could be a sharp drop in the sale of residential land from the Government this year.

Singapore tenders out land on the reserve list if developers indicate interest by committing to a minimum bid acceptable to them.