A SMALLISH plot at Geylang East Avenue 1 has drawn keen interest - 16 developers bid - and reeled in a top bid of $145.9 million, or $775.96 per square foot per plot ratio (psf ppr) from Sustained Land's SL (Serangoon).
This is the second highest number of bids that a government land sales (GLS) tender has attracted to date in the GLS programme for 2013, noted Nicholas Mak, executive director at SLP International.
The tender for the condominium site at Faber Walk in Clementi, which closed in June last year, drew 18 bids.
"The high number of bids is partly due to many developers becoming more selective of the development sites they would acquire. These developers prefer well-located sites that are relatively small, preferably not exceeding 500 units per site," he said.
Another factor could be that there aren't many attractive sites in the H1 2014 GLS programme's confirmed list, said Orange Tee's head of research and consultancy, Christine Li, noting that a significant number of large developers participated in the tender.
"Other than the Prince Charles Crescent parcel, this is one prime site that is located just a stone's throw away from Aljunied MRT station and is near Paya Lebar Central, a new growth area and future regional centre."
The reserve list site, which measures about 67,146 sq ft with a permissible gross floor area of about 188,013 sq ft, was triggered when a developer committed to bid at least $95 million for the parcel. Located opposite Geylang East Public Library, the site is expected to yield about 215 units.
The second highest bid, put up by Tannery Holdings and Sekisui House, was $142.8 million, or $759.40 psf ppr. Other large developers that took part included City Development's unit Verwood Holdings and TID Residential which put up a joint bid of $138 million ($733.99 psf ppr) and Frasers Centrepoint's unit FCL Place with a bid of $132.2 million, or $703.04 psf ppr.
The lowest bid was put up by Alliance Homes, at $104.4 million, or $555.01 psf ppr.
Ms Li surmised that the breakeven price for the site could be around $1,300, and that the project could start selling at around $1,420 psf.
Mr Mak estimates the developer's breakeven price to be in the range of $1,230 to $1,300 psf, resulting in a future launch price of over $1,400 psf.
"It is a rather optimistic price for a 99-year leasehold condominium in this location as the recent transacted prices of freehold developments in this location ranged from $1,300 to $1,400 psf," he said.
"This land tender result indicates that despite recent signs of softening prices and demand in the residential property market, some developers are still very bullish in their bid to acquire well-located residential sites.
"The future development is likely to face direct competition from another GLS condominium site at Sims Drive/Aljunied Road whose tender will close on April 29. The Sims Drive site could potentially add a huge supply of about 900 housing units into the area."
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Originally Posted by Ringo33
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