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Challenging market weighs down bids for West Coast site

Tender gets just 6 bids, down from 18 for neighbouring site in June 2013; top bid also 20% lower

By Kalpana Rashiwala

[email protected]@KalpanaBT

Aug 5, 2015


A STATE tender closing on Tuesday for a 99-year leasehold private residential site along West Coast Vale with waterway frontage along Sungei Pandan fetched just six bids. That's a third of the 18 received for the neighbouring Waterfront @ Faber site at a tender that closed back on June 18, 2013, shortly before the total debt servicing ratio framework was introduced.

Moreover, EL Development's top bid of S$551.15 per square foot per plot ratio (psf ppr) at the latest tender is nearly 20 per cent lower than the S$687.42 psf ppr for the earlier site, which went to Aspial Corp unit World Class Land.

Market watchers said the gulf in the outcomes between the two tenders was due to a combination of weaker market conditions today as well as site-specific factors.

One side of the latest plots fronts the busy Ayer Rajah Expressway and the project's developer may have to adjust pricing to factor in the noise, suggested JLL national director Ong Teck Hui. Morever, property market conditions are now more challenging - with rising interest rates an additional factor to consider besides TDSR.

The cautious top bid also factors in the sales progress of nearby projects. "According to URA monthly sales data in June 2015, Waterfront @ Faber has 72 units unsold out of a total of 210," said Mr Ong.

ERA Realty key executive officer Eugene Lim highlighted that developers' interest for the latest site may have been more conservative in view of the substantial unsold supply of 18,275 non-landed private homes that had sales licences as at the end of the second quarter.

Chinese developers were noticeably absent at the latest tender.

SLP International executive director Nicholas Mak said the low turnout at Tuesday's tender could be due to some developers saving their bullets for more attractive sites in the second-half Government Land Sales Programme.

EL Development's top bid was 3.2 per cent higher than the next highest offer of S$533.96 psf ppr from a joint-venture involving Hoi Hup Realty, Sunway Developments and Oriental Worldwide Investments. The lowest bid of S$415.69 psf ppr was cast by a tie-up between Singapore Land unit Singland Homes and Kheng Leong Company.

EL Development's managing director, Lim Yew Soon, estimated the group's breakeven cost at slightly under S$1,000 psf, factoring in a higher construction cost due to the Prefabricated Prefinished Volumetric Construction standard stipulated for this project. The group hopes to launch its project in a year's time and is targeting an average selling price of around S$1,100-1,200 psf.

The group's proposed scheme will have two 40-storey blocks with about 700 units. In addition to one to four-bedroom apartments, there will be some strata landed homes.