http://www.straitstimes.com/archive/...-site-20130206

Cautious mood sees only three bids for prime site

Published on Feb 06, 2013

By Melissa Tan


A PRIME site in Commonwealth Avenue that would have had developers scrambling a few months ago attracted only three bidders.

Analysts expected the 99-year leasehold plot to be heavily contested, with up to 10 bids likely. But a play-it-safe mood has entered the market on the back of new cooling measures.

"The small number of bidders was not expected as this is an attractive site," said ERA Realty key executive officer Eugene Lim.

A consortium of Hong Leong Holdings unit Intrepid Investments, City Developments unit Verwood Holdings and Hong Realty offered $562.8 million for the 12,086.8 sq m site, or $883 per sq ft per plot ratio (psf ppr).

Its bid, which was about what many analysts had tipped, was just 2.46 per cent more than the $549.3 million, or $862 psf ppr, lodged by Keppel Land unit Acresvale Investment.

Next was a $541.9 million offer from a consortium of Frasers Centrepoint's FCL Topaz, Far East Orchard, Sekisui House and China Construction (South Pacific) Development.

Jones Lang LaSalle national director of research and consultancy Ong Teck Hui called the tender results "lacklustre", noting all three bids were within a 4 per cent margin, reflecting similar sentiments among the bidders.

The top bid from the Hong Leong-led group was mostly within expectations, given the site's proximity to Queenstown MRT station. It also reflected the developers' confidence in attracting buyers for the project, which could yield 700 units.

But the top bid was much lower than the $970 psf ppr paid for a site in Alexandra View awarded last December.

DWG senior manager Lee Sze Teck said recent government cooling measures may have deterred some developers from bidding for sites in the city fringe.

CBRE Research associate director Desmond Sim added that "the large quantum of more than $500 million filtered out many other players and kept it to a close fight between the bigger players".

The number of bids is in stark contrast with recent tenders for government land sites in Ang Mo Kio Avenue 2 and Jurong West Street 41. Both plots attracted 12 bids each.

Analysts expect the break- even price for the Commonwealth Avenue site to range from $1,300 psf to $1,350 psf. The launch price could be between $1,500 psf and $1,600 psf.

Homes in Queenstown are in demand and Housing Board resale flats there are the most expensive in Singapore. Last year, an HDB resale flat in the area became the first unit to breach the $1 million mark.

Resale units at the 99-year leasehold condominium Queens, across the road from the site, are selling for $1,300 psf on average.

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