http://www.businesstimes.com.sg/arch...f-ppr-20140501

Published May 01, 2014

Top bid for Potong Pasir plot seen at $650-900 psf ppr

Commercial use capped at 5,000 sq m, or 8.8% of project's maximum GFA

By Kalpana Rashiwala

[email protected] @KalpanaBT


A COMMERCIAL and residential site next to Potong Pasir MRT Station launched for sale on the confirmed list of the Government Land Sales Programme is expected to draw four to eight bids.

Property consultants' forecasts for the top bid varied from $650 to $900 per square foot of potential gross floor area. The tender for the site closes on Aug 19.

The government yesterday also made available for application on the reserve list an executive condominium (EC) site at the corner of Sembawang Road and Canberra Link, although most market watchers are not expecting it to be triggered for launch anytime soon as there is sufficient EC supply.

Both sites have 99-year leasehold tenures.

Sites on the reserve list are launched for tender upon successful application by a developer with an undertaking of a minimum bid price acceptable to the State. Confirmed list sites, on the other hand, are launched for tender according to a known schedule, regardless of demand.

The 1.6 hectare Potong Pasir site, located along Meyappa Chettiar Road, can be developed into a 13 to 16-storey project with a maximum gross floor area (GFA) of 56,523 square metres (608,408 square feet). Of this, a maximum 5,000 sq m (53,819.5 sq ft) - or 8.8 per cent of the total GFA - can be for commercial use. This includes a 500 sq m (about 5,382 sq ft) cap for restaurant use - due to traffic congestion issues. The Urban Redevelopment Authority has also banned uses such as bars, pubs, karaoke lounges, night clubs and massage parlours for the project's commercial component - as they cause or pose disamenities such as noise, disorderly behaviour and other disturbances to residents of the project as well as surrounding developments.

URA has set a 5,000 sq m cap for total commercial use as there are already other retail facilities in the vicinity and in order not to strain the capacity of the road network in the area.

The project's residential component can generate an estimated 685 private homes. A through-block link has been safeguarded in the development to make it convenient for commuters to walk from the MRT station to the HDB neighbourhood centre.

CBRE Research head Desmond Sim said: "We expect bids to come in from blue-chip developers as well as some joint ventures to mitigate the equity investment and market risk."

This will be the fifth site that URA will be selling around Potong Pasir MRT Station since 2010. The earlier plots are now being developed into three condo projects - Nin Residence, Sennett Residence and Sant Ritz - and a mixed development, The Venue Residences and Shoppes.

Lee Lay Keng, DTZ regional head (SEA), Research, predicts an $800-900 per square foot per plot ratio (psf ppr) top bid. This is higher than the $793 psf ppr at which The Venue site nearby was awarded in September 2012 - because of the bigger commercial component compared with the earlier plot's 2,000 sq m.

Jones Lang LaSalle national director Ong Teck Hui said: "With residential units in nearby developments currently selling for around $1,400 psf, bidders are likely to use this as a reference point in their pricing but also take into account a likely softening in prices by the time the project is launched for sale."

As for the Sembawang EC site, consultants' estimates of its pricing range from $280 to $350 psf ppr. R'ST Research director Ong Kah Seng reckons that the earliest the plot could be triggered for release from the reserve list would be in late-Q3 or in Q4 this year. "There's some sense of oversaturation of new private homes and ECs in the immediate vicinity and in the Sembawang location in general."

A City Developments-TID consortium bagged the next door EC plot at a state tender that closed in January this year at $350 psf ppr. At the 506-unit SkyPark Residences, a nearby EC project that was launched in Q4 last year, only 293 units were sold as at end-Q1 this year.