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Thread: Sim Lian tops bids for EC site, beating market expectations

  1. #1
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    Default Sim Lian tops bids for EC site, beating market expectations

    http://www.businesstimes.com.sg/arch...tions-20140905

    Published September 05, 2014

    Sim Lian tops bids for EC site, beating market expectations

    Its S$361 psf ppr bid for Choa Chu Kang plot beats 7 others but is close to average price for inferior sites in Feb

    By Kalpana Rashiwala

    [email protected] @KalpanaBT


    THE latest state tender for an executive condominium (EC) site in Choa Chu Kang Drive shows that developers would still make a beeline for attractive sites.

    Located about 550 metres from Choa Chu Kang MRT Station and Bus Interchange and Lot One Shoppers' Mall, the 1.9-hectare plot drew eight bids, with the highest at S$361.08 psf ppr from Sim Lian Land - slightly above market expectations.

    JLL national director Ong Teck Hui, for instance, had expected the site to draw 5-6 bids with the winning bid at S$320-350 psf ppr. However, he added: "I see a mix of both caution and optimism. The optimism is in the top bid being higher than expected; the caution is the top bid being pretty close to the S$357 psf ppr average price for the two adjacent Choa Chu Kang Grove EC plots sold in February - despite the latest site being more attractive."

    The pair of Choa Chu Kang Grove sites are about 1.1 km from Choa Chu Kang MRT Station.

    At the latest tender in Choa Chu Kang Drive, Sim Lian's bid was just 2.2 per cent above the next highest, $353.21 psf ppr, from a consortium comprising Hoi Hup Realty, Sunway Developments and Oriental Worldwide Investments.

    Desmond Sim, head of CBRE Research Singapore, said: "The number of bids and close winning margin indicate the healthy interest in the EC market, despite current market conditions."

    City Developments Limited (CDL) unit Verwood Holdings teamed up with TID Residential to bid nearly S$343 psf ppr, the third highest. Back in March 2011, CDL had paid S$321 psf ppr for the next-door plot, on which it is developing The Rainforest EC project.

    Also bidding at Thursday's tender were Nanshan Group Singapore (S$337 psf ppr) and Qingjian Realty (S$331.08 psf ppr). A partnership of Evia Real Estate (6), Ho Lee Group, CNH Investment, OKP Land and Lian Soon Holdings offered S$311.46 psf ppr while MCL Land priced the site at S$305.17 psf ppr . This was significantly lower than the S$357 psf ppr average price that it had paid earlier this year for the pair of Choa Chu Kang Grove plots, in a much inferior location. MCL plans to amalgate the plots and build a project of over 1,300 units.

    The lowest bid at Thursday's tender - from Koh Brothers unit KBD Ventures - was S$280.21 psf ppr.

    The strong turnout of eight bidders along with the higher-than-expected top bid of S$361 psf ppr constrasts with the lacklustre performance seen two months ago for an EC site in Sembawang Avenue, about 550 metres from Sembawang MRT Station.

    That site drew just four bids and its winning bid of S$320 psf ppr was the lowest price for an EC site since November 2012.

    ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions that are fully lifted 10 years after the completion of the project.

    Demand for ECs has softened following the December 2013 introduction of a mortgage service ratio (MSR) cap for EC purchases from developers.

    Nevertheless, pent-up demand for this housing type is expected for the five EC project launches slated by year-end.

    This is because no new EC projects have been launched in nearly a year, following regulations announced in January 2013 stipulating that developers would be allowed to sell units in EC projects only 15 months from the date of award of the site, or after completion of foundation works, whichever is earlier. Given that mass-market condo prices have started to soften, most analysts would expect prices of EC units to follow suit.

    Market watchers reckon that based on the top bid for the Choa Chu Kang Drive site, the breakeven cost could be around S$700-720 psf. This still leaves the bidder with some cushion for a potential price softening from current levels. In the first half of this year, developers' sales of EC units averaged around S$790 psf going by caveats data, shows JLL's analysis.

    When contacted, a Sim Lian spokesman said that the group expects to launch a project on the site in early 2016, given current rules. "We're looking at a project of 500-plus units. This is an attractive location, near the MRT station, a fairly big suburban mall and other amenities."

    R'ST Research director Ong Kah Seng said that developers who pay high prices for EC sites may raise the proportion of smaller-sized units - for instance, by building more two-bedders instead of three-bedroom units, in order to keep the price quantum within reach of buyers' MSR cap.

  2. #2
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    Default Choa Chu Kang EC site draws high bids in close contest

    http://www.straitstimes.com/archive/...ntest-20140905

    Choa Chu Kang EC site draws high bids in close contest

    Sim Lian bags plot near MRT station, Lot One mall

    Published on Sep 5, 2014 2:06 AM

    By Cheryl Ong


    THE tender for an executive condominium (EC) site in Choa Chu Kang Drive has surprised the market with higher-than-expected bids in a keen tussle among eight bidders.

    Industry watchers said the "optimistic" bids for the 205,138 sq ft parcel reflected its location near Choa Chu Kang MRT station and Lot One Shoppers' Mall. It has a maximum gross floor area of 574,388 sq ft, and can yield up to 535 units.

    Sim Lian Land's top offer of $207.4 million works out to $361 per sq ft (psf) per plot ratio (ppr).

    When the 99-year leasehold site was put up for sale in June, experts expected five offers, with a winning bid between $320 and $350 psf ppr.

    "The number of bids and close winning margin indicate the healthy interest in the EC market, despite current market conditions," said Mr Desmond Sim, research head at CBRE.

    However, the tender results were still "realistic", said Mr Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle.

    In February, two EC parcels in Choa Chu Kang Grove were sold for $375 psf ppr and $339 psf ppr.

    Sim Lian's bid edged out a bid of $202.9 million, or $353 psf ppr, from a consortium of Hoi Hup Realty, Sunway Developments and Oriental Worldwide.

    City Developments unit Verwood Holdings and its partner TID Residential came in third with a bid of $197 million - or $343 psf ppr.

    Mr Eugene Lim, key executive officer of ERA Realty, said developers are still optimistic about ECs given their popularity with HDB upgraders.

    But developers which have secured sites at high land costs may have to "innovate around the parameters of cooling measures", said Mr Ong Kah Seng, director at R'ST Research. One way is to raise the proportion of smaller units.

    This will make units more affordable despite the lowered mortgage servicing ratio, which limits monthly housing payments at 30 per cent of the buyer's gross monthly income, he said.

    [email protected]

  3. #3
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    Default

    So after factoring in margins, Sim Lian will need to sell it at $800psf?

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