Jurong West landed housing site draws 32 bids

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Published December 9, 2009

Jurong West landed housing site draws 32 bids

Top bid of $38.5m for popular plot comes from Kheng Leong unit Chappelis

By UMA SHANKARI


A LANDED housing site at Jurong West put up for sale by the government drew a whopping 32 bids at the close of the tender yesterday.

The top bid of $38.5 million or $254 per sq ft of land area came from Chappelis, a unit of Wee Cho Yaw's privately held Kheng Leong.

The huge interest in the 151,759 sq ft site is a stark turnaround from last year. The 99-year leasehold parcel was put up for tender in March 2008 via the government's confirmed list, but was not awarded because the two bids tendered - $11.8 million and $10.3 million - were considered too low. The top bid then worked out to just $78 psf of land area.

This time around, the site was placed on the reserve list and put up for tender only after an unnamed developer committed to bid at least $15 million, or $99 psf.

'Now the residential market is performing well, the limited supply of landed sites for development has created substantial demand for this site,' said Li Hiaw Ho, executive director at CBRE Research.

Market watchers also said the site proved popular because it is small, which means smaller players submitted bids because the amount they would have to fork out would not be too high.

However, there were far more bids than the 10 that most analysts had expected.

'I'm astounded by the number of bids,' said Chesterton Suntec International's research and consultancy director Colin Tan. To meet the strong demand for landed housing plots indicated by this tender, the government might want to release more such plots next year, he added.

Kheng Leong's bid is just one per cent higher than the next highest bid of $38 million, submitted by Hoi Hup and Malaysia's Sunway group. But the top bid is 129 per cent higher than the lowest bid of $16.8 million by Boon Keng Development. Boon Keng put in the higher bid of $11.8 million in last year's tender.

CBRE's Mr Li said that based on the top bid, terrace houses on the site would be priced around $1.25-1.3 million each. Currently, houses in the nearby Westville and Westwood landed estates are sold in the resale market at $850,000 to $1.1 million each, he pointed out. Another alternative for Kheng Leong would be to build cluster housing.

'Potential buyers could comprise locals working at manufacturing firms in Jurong and Tuas, as well as academics at nearby Nanyang Technological University,' Mr Li noted.

The plot is surrounded by other landed estates such as Westwood Park and The Floravale condominium and is near the Pan-Island Expressway.

http://www.straitstimes.com/PrimeNew...ry_464197.html

Dec 9, 2009

JURONG PLOT'S MASSIVE RESPONSE

32 bids, bumper price

By Joyce Teo


A SMALL site in Jurong West that was withdrawn from sale 21 months ago because bids were too low attracted a record 32 offers and a bumper price yesterday after going back onto the market.

The winning bid for the government plot came in at $38.5 million or $254 per sq ft - more than three times the bids made last year and far higher than even experts had expected in today's better economy.

While the price lodged by Chappelis - 2.5 times the minimum offer of $15 million - raised some eyebrows, it was the sheer number of bids that stunned property experts.

The 32 that were lodged is more than twice the previous record - the 15 placed on Oct 9 for a Serangoon Avenue 3 land parcel, according to the Urban Redevelopment Authority.

The 14,098.9 sq m site in Westwood Avenue drew bidders of all sizes, from the small players like Fragrance Homes to the big boys such as Far East Organization.

They included Chip Eng Seng's CEL Development, EL Development, Soilbuild Group, TID and Frasers Centrepoint. Malaysian firm S P Setia International also joined in the competition.

CBRE Research executive director Li Hiaw Ho told the media yesterday: 'Now that the residential market is performing well, the limited supply of landed sites for development has created substantial demand for this site.'

Chappelis, controlled by United Overseas Bank chairman Wee Cho Yaw's privately held Kheng Leong Company, bid a tad above the second highest offer of $38 million or $250 psf from a joint venture between Hoi Hup Realty and Sunway Developments.

Act-Nobel Homes was third highest at $35.1 million or $231 psf.

While the top bid is 'steep', the site is seen as affordable, which appeals to a wide range of developers, including the contractor types, said an industry source.

Credo Real Estate managing director Karamjit Singh said the site hits 'a perfect sweet spot' in terms of size and price.

'It is not too large and it is in a mass market location, but in the landed segment where there is less competition.'

Landed plots of such sizes are hard to come by, he added.

Certainly, the pick-up in the market and better economic outlook were driving demand for the site.

The plot had drawn two low bids - $11.8 million and $10.33 million - early last year and was not awarded.

It was on the confirmed list then and triggered for sale in late October this year. Property consultants predicted bids ranging from $17 million to $30 million.

'Prices of mass-market condos have gone up so much that many are priced out of the market,' said a developer who bidded.

'Apartments are also going smaller so if you have at least $1 million-plus to spend, it may be better to buy a landed property.'

Currently, an apartment of more than 2,000 sq ft would be beyond the reach of many people, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

'The rental yield of a landed property may not be as high as that of an apartment but you get a good size.'

Based on the top bid, terrace houses on the site would be priced around $1.25 million to $1.3 million to as high as $1.5 million, experts said.

The top bidder is likely to consider cluster housing whereby about 90 strata units can be built, as opposed to around 55 to 60 conventional landed units, they said.

Nearby, houses in Westville and Westwood landed estates are selling in the resale market at $850,000 to $1.1 million each, CBRE's Mr Li said.

My guess is that there will be strong demand from Tow Kays who want to stay near their factories.

It could also be targeted at those who will work at the new hospital in Jurong East. Doctors?

What's brewing at Jurong west leading to such bid price? developers made too much profit elsewhere?