Jurong EC site draws record bid price

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http://www.straitstimes.com/archive/...price-20130731

Jurong EC site draws record bid price

Published on Jul 31, 2013

By Melissa Tan


RECORDS were smashed when 16 developers fought it out for an executive condominium (EC) plot in Jurong.

The top bid of $272.8 million for the 20,213 sq m site on Yuan Ching Road translates to $418 per sq ft (psf) per plot ratio (ppr), a new high for an EC site.

The number of bidders was also a record for an EC site.

The top bid came from a consortium of Evia Real Estate, BBR Development, CNH Investment and OKP Land, and was just 1.8 per cent above the second-highest offer of $267.9 million, or $410 psf ppr, lodged by Greatview Development.

The previous record for an EC tender was $392 psf ppr for the Tampines Trilliant site.

The remarkable contest dramatically underlined just how bullish developers still are on the sector despite recent cooling measures.

The tender process had also ended on the same day - yesterday - bids closed on two other EC sites, under a move to offer similar sites at the same time.

The reasoning behind this is that closing tenders on the same day can help moderate tender bids and, in turn, future property prices. But analysts said that this attempt seems to have failed.

"The three-in-one tender exercise does not seem to have an effect in tempering tender participation as well as bid prices for all the three sites offered," said Jones Lang LaSalle Singapore research director Ong Teck Hui.

Analysts said developers were likely encouraged by pent-up demand and strong sales at the nearby J Gateway condo launch in Jurong late last month.

Evia Real Estate Management managing director Vincent Ong said the consortium was "confident of the EC market due to the burgeoning 'sandwiched class' and its increasingly sophisticated" taste in homes.

It plans to build 500 units on the Yuan Ching Road site.

Analysts put the break-even cost at $740 psf to $802 psf, and launch price at $882 psf.

The other two EC site tenders that closed yesterday attracted less frenetic bidding and fewer contestants, though prices were still relatively high.

A 24,065 sq m site at Punggol Drive fetched a top bid of $312.8 million or $355 psf ppr, lodged by Peak Square in a six-way contest.

And a 13,564.8 sq m plot at Punggol Central drew a top bid of $156 million or $356 psf ppr, lodged by a consortium comprising Master Contract Services and Keong Hong Construction. There were eight bids.

OrangeTee research head Christine Li said the Punggol bids were "slightly more conservative because of the potential policy risk that the $30,000 EC grants for first-timers might be removed before developers could launch the projects".

Still, both top bids exceeded the previous high of $351 psf ppr for a Punggol EC set by the Waterwoods project last December.

Analysts estimated break- even costs of $665 psf to $726 psf for the Punggol Drive site and $665 psf to $728 psf for Punggol Central.

Both are expected to launch at $740 psf to $800 psf.

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http://www.businesstimes.com.sg/arch...ecord-20130731

Published July 31, 2013

Bid for Jurong EC plot raises the roof and breaks record

By Kalpana Rashiwala


[SINGAPORE] An all-time record price for executive condominium land has been set for a plot in Jurong, an area which has been starved of new EC supply. Located near Jurong Country Club, the 99-year leasehold plot received a top bid of $418.53 per square foot per plot ratio (psf ppr) amid strong participation from 16 bidders. The buzz in the location, following strong sales at J Gateway condo last month, also contributed to the strong demand for the EC plot.

However, two other EC sites - both in Punggol - whose tenders also closed yesterday in a bid by the authorities to rein in bullish bids for EC land - fetched top bids of about $355 psf ppr and $356 psf ppr, just a shade above the $351 psf ppr that a plot at Punggol Field Walk/Punggol East drew in December. Analysts said this was probably because developers were mindful of a possible saturation of EC and 99-year private condo projects in the Punggol/Sengkang location.

ECs are a public-private housing hybrid with initial buyer eligibility and resale restrictions which are completely lifted 10 years after the completion of an EC project.

Some analysts said the government's attempt to have simultaneous tender closings for three EC sites does not seem to have had its desired impact of tempering tender bids, while others suggest it may be too early to declare the experiment a failure.

Besides the scarcity of new EC supply in Jurong in particular and developers' voracious appetite for residential land in general, they highlight strong underlying demand for new ECs, which cater to owner occupiers - who are not the target of many of the property cooling measures.

Also, under the Total Debt Servicing Ratio framework, a buyer wishing to upgrade from his current Housing and Development Board (HDB) flat can probably get a bigger housing loan for an EC purchase, rather than a private property; this is because the HDB monthly mortgage payment will not be factored into TDSR calculations when banks assess the amount of loan they grant to an EC buyer, notes Nicholas Mak, executive director at SLP International.

At yesterday's tender, the top bidder for the Jurong plot, located at Yuan Ching Road/Tao Ching Road, was a consortium comprising Evia Real Estate (5), BBR Development, CNH Investment and OKP Land. Its $418.53 psf ppr bid topped the previous EC land record of $392 psf ppr set for a plot in Tampines Central 7 in 2011 that is now being developed into Tampines Trilliant.

The 16 bids for the Jurong site came close to the record 19 received for the Summerdale EC site in Boon Lay Drive in May 1997, points out Mr Mak.

Property consultants estimate the breakeven cost for Evia's bid at $740-800 psf. CBRE Research associate director Desmond Sim predicts an average selling price of about $900 psf, which will set a new record for ECs. A seasoned developer estimates a lower selling price of around $840 psf.

Evia Real Estate Management's managing director, Vincent Ong, said the group plans to develop a 500-unit EC project that "promises compelling design features and lifestyle options".

"We are confident of the EC market due to the burgeoning sandwiched class and its increasingly sophisticated home taste."

The company is the real estate arm of private equity firm Evia Capital Partners.

Its bid was just 1.8 per cent higher than the next highest bid of $410.96 psf ppr by Greatview Development, controlled by Yu Zhisong. Other bidders include UOL Venture Investments, Singhaiyi, and a joint venture involving Sing Holdings, Maxdin and the Chiu family's Tang City Properties.

Also bidding were City Developments-TID, Frasers Centrepoint, EL Development, Koh Brothers, and Hoi Hup. The lowest bid - from Han Chee Juan's Teneriffe Development - was $323.37 psf ppr.

The plot at Punggol Central/Edgedale Plains drew eight bids, with a top bid of $356.14 psf ppr from a JV between Master Contract Services and Keong Hong Construction. This was 1.4 per cent more than the second highest bid by Greatview Development.

Six bids were received for a nearby waterway-fronting plot along Punggol Drive/Edgedale Plains and next to Kadaloor LRT Station. Highest bidder Peak Square - a unit of Kheong Leong - priced the site at $355.17 psf ppr, 2.5 per cent more than the next highest bidder, Kingsford Development.

Sim Lian was the lowest bidder for both Punggol plots.

Several developers went for more than one site despite the simultaneous tender closing of the three EC sites. For instance City Developments bid for all three sites as did Kingsford Development.

Frasers Centrepoint, Evia, Sing Holdings and Sim Lian were among those who bid for two sites.