Geylang residential site draws $146m bid

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http://www.straitstimes.com/archive/...m-bid-20140124

Geylang residential site draws $146m bid

Published on Jan 24, 2014

By Melissa Tan


A SMALL developer trumped some of the property game's bigger guns to top a spirited 16-way contest over a plum plot near Aljunied MRT.

SL (Serangoon), a unit of Sustained Land, aced the crowded field with an unexpectedly high bid of $145.9 million for the compact site at Geylang East Avenue 1.

That translates to a price of $776 per sq ft (psf) per plot ratio (ppr) - well above market expectations of up to $650 psf ppr.

The 99-year leasehold plot has a land area of 67,146 sq ft, which can yield about 215 homes.

Consultants said its small size meant it was more affordable, which likely prompted many smaller developers to try their luck.

"Previously, small developers had to team up in order to bid for the larger sites," said OrangeTee research head Christine Li.

R'ST Research director Ong Kah Seng said developers could be willing to bid bullishly just to secure a plot, and were less focused on making fat profit margins.

He said: "If they have to eventually sell at break-even price, they might be willing to do so."

State land tenders for small plots have been few and far between in recent years.

The last one with a gross floor area of less than 20,000 sq m - or around 215,000 sq ft - attracted 23 bids, said Ms Li.

That was for a 109,478 sq ft site in Jalan Jurong Kechil in November 2012 that has been developed into The Hillford.

Sustained Land's bid was just 2 per cent more than the second-highest offer of $759 psf ppr, lodged by a tie-up between Far East Organization unit Tannery Holdings and Sekisui House.

Alliance Homes placed the lowest bid of $555 psf ppr.

Sustained Land is controlled by Mr Douglas Ong Pang Chye, who told The Straits Times by phone yesterday that he was interested in the site because of its good location near the Aljunied MRT station.

He said he was unfazed by the weakness of the Singapore residential property market. "Provided the Government doesn't have any more cooling measures, if it's a good site, it should be okay," he added.

The plot was put on the Government Land Sales reserve list in May last year and was triggered for sale in December.

That was after an unnamed developer promised to bid at least $95 million or about $505 psf ppr.

Consultants estimate that the development's break-even cost could be $1,230 psf to $1,300 psf, with selling prices about $1,420 psf.

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http://www.businesstimes.com.sg/arch...p-bid-20140124

Published January 24, 2014

Geylang reserve list site draws $146m top bid

Strong interest, 16 bidders, may be due to dearth of good sites in H114 list

By Mindy Tan [email protected]


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."