Bids for Yishun industrial site beat expectations

[reporter2]

http://www.businesstimes.com.sg/spec...tions-20120927

Published September 27, 2012

Bids for Yishun industrial site beat expectations

Soilbuild leads pack of 5, with offer of $100.48 psf ppr

By zeinab yusuf saiwalla


AN INDUSTRIAL site at Yishun Avenue 9 drew a total of five bids with a top offer of $31.69 million or $100.48 per square foot per plot ratio (psf ppr) from Soilbuild Group Holdings, slightly above market expectations.

Property consultants had initially estimated offers of between $50 and $70 psf ppr owing to the shorter, 30-year lease period and a relatively smaller size (11,719.9 sq m or 126,152 sq ft), in comparison to adjacent plots.

OKH Holdings, was the second highest bidder, with an offer of $28.7 million or $91 psf ppr.

The lowest offer for the site, which has a maximum permissible gross plot ratio of 2.5, was from Vantage Properties at $22.8 million or $72.28 psf ppr.

"The offers are fairly bullish because at this price, their breakeven price could be as high as $265-290 psf ppr," commented Nicholas Mak, SLP International executive director.

"But that said, Soilbuild is an experienced property developer, and must know what they are doing. Also, since they are a construction firm they can control the cost element."

Furthermore, given the recent offer of $95.13 psf ppr by Soon Hock Tuas Development for another plot of land at Yishun Avenue 9 last month, property consultants are not all that surprised at the higher bids.

Soilbuild had made an offer for that site as well, at $71.06 psf ppr but ranked third in its offer.

Mr Mak explained that although the government's reduction of land lease to 30 years can probably slow down the pace of industrial property price increases, developers are expecting a lot of liquidity in the market and that is why prices are not sky-rocketing but slowly creeping up.

Last month, Soilbuild was awarded an industrial site at Bukit Batok Street 23 after it submitted the highest bid of $32.33 million or $80.03 psf ppr for the 161,578 sq ft site.

[reporter2]

http://www.straitstimes.com/archive/...-site-20120927

Soilbuild makes top bid of $31.7m for Yishun site

Published on Sep 27, 2012


A YISHUN industrial site attracted a top bid of $31.7 million in a five-way tussle as prices continue to defy gravity.

The offer from Soilbuild Group works out to $100 per sq ft (psf) per plot ratio (ppr) for the 1.17ha parcel in Yishun Avenue 9.

Experts said the strong bid sets a new price benchmark for industrial sites on 30-year leases in the area.

Soilbuild's offer was 10 per cent more than the $91 psf ppr lodged by second-placed OKH Holdings and about 39 per cent ahead of the lowest bid, made by Vantage Properties.

Other bidders included Ascendial and a joint bid from Huayan International Development Group and Hua Yuan Organisation.

The site is zoned B1, which is typically for light and clean industrial use, and has a gross plot ratio of 2.5.

Its price tops a similar 30-year leasehold Yishun site sold for $95 psf ppr last month, noted Mr Nicholas Mak, head of research at property consultancy SLP International.

He expects the break-even price of the latest site to range from $265 psf to $290 psf.

While the bid seems a confident one, prices for 30-year industrial sites passed the $100 psf ppr benchmark in Kaki Bukit last month, Mr Mak said.

He expects overall industrial prices to increase by 25 per cent to 30 per cent this year.

They have already surged 15 per cent in the first six months.

However, Mr Mak cautioned that land bids might fall if the economy falters and Singapore enters a prolonged recession.

HSR Property Group special adviser Donald Han said the third round of quantitative easing unleashed in the United States last week has bolstered sentiment in the property market, among both developers and end-users.

"Developers are flush with cash and with their strong balance sheet, even if a technical recession occurs, they will be able to withstand it," he said.

Soilbuild paid $32 million for a 1.5ha site in Bukit Batok last month.

ESTHER TEO