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Thread: URA decides not to award Ten Mile Junction site

  1. #1
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    Default URA decides not to award Ten Mile Junction site

    http://www.businesstimes.com.sg/sub/...76660,00.html?

    Published April 26, 2008

    URA decides not to award Ten Mile Junction site

    Top bid of $61m, or $162 psf ppr, deemed too low


    THE Urban Redevelopment Authority (URA) yesterday said that it has rejected the bid by Peak Green for a residential site at Choa Chu Kang/ Woodlands Road as the price offered was too low.

    Peak Green's offer was $61 million, or just over $162.40 per square foot per plot ratio (psf ppr).

    It was the higher of two bids which the 99-year leasehold site attracted. The only other bid was from Sim Lian Land which offered $45.68 million, or $121.60 psf ppr.

    Peak Green is understood to be linked to Kheng Leong, the privately-owned property group controlled by the family of banker Wee Cho Yaw.

    The tender for the Choa Chu Kang/ Woodlands Road site was launched last December and closed on April 3 this year.

    At the time, estimates by consultants pegged the value of the site, on which the state-owned Ten Mile Junction currently sits, at between $200 psf ppr and $250 psf ppr.

    The 15,645 sq metre (168,403 sq ft) site has a residential potential gross floor area of 254,394 sq ft, which can house between 200 and 240 flats or serviced apartments.

    The existing commercial gross floor area is 121,191 sq ft.

    Consultants had been divided on whether the URA would award the site but at least one noted that the bid price was one of the lowest in years.

    The last time land tender bids of below $200 psf ppr were submitted was between 2000 and 2002.

    Separately, URA said yesterday that it has awarded a transitional office site at the Scotts Road/ Anthony Road area to UOB Kay Hian Trading which submitted the highest bid of $34 million, or $243 psf.

    The tender was launched on Feb 28 and closed on Thursday. The 8,683 sq metre site was offered for sale on a 15-year lease.

  2. #2
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    Default Re: URA decides not to award Ten Mile Junction site

    The mass market is quite a safe bet.

    The Government is basically saying that prices cannot go below a certain point. For condos around Yew Tee, this base price is $520-550 psf.

    The Business Times (4 April 2008) reported:

    Kheng Leong unit offers $162.40 psf ppr.

    CB Richard Ellis Research executive director Li Hiaw Ho said that if the site were awarded, the breakeven price for the newly developed residential project will be around $400 psf. This will translate to a possible selling price of about $500 psf.

    Units in Yew Tee Residences, a new 99-year leasehold project and Maysprings, the development closest to the subject site, were transacted at $520-550 psf, he noted.
    This means that the recently transacted price of $520-550 psf around that area is what the Government feels is the minimum price. In other words, they will not release land at a price that will allow developers to price their units below that.

    So buying a mass market-condo is a very safe bet.

    The reason is quite obvious. Other than HDB dwellers, the next largest group of voters is mass market-condo dwellers. The Government needs to protect their interests, as well as that of those staying in HDB flats.

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    Default Re: URA decides not to award Ten Mile Junction site

    Quote Originally Posted by jlrx
    The mass market is quite a safe bet.

    The Government is basically saying that prices cannot go below a certain point. For condos around Yew Tee, this base price is $520-550 psf.

    The Business Times (4 April 2008) reported:



    This means that the recently transacted price of $520-550 psf around that area is what the Government feels is the minimum price. In other words, they will not release land at a price that will allow developers to price their units below that.

    So buying a mass market-condo is a very safe bet.

    The reason is quite obvious. Other than HDB dwellers, the next largest group of voters is mass market-condo dwellers. The Government needs to protect their interests, as well as that of those staying in HDB flats.
    As you've quite correctly pointed out, URA's decision to reject Peak Green tender price at $162 psf ppr does suggest that bottom end bid for 99 LH land must at least come in around low to mid 200 range. This does point towards 99LH project breakeven hovering around $550 psf ppr basis with likely selling price of $650 upwards based on today's construction cost.

    Ten Mile Junction should not have been put on the market in the first place when the Bukit Panjang station location is still not officially announced and construction for DTL 2 is at least 2 years away. When the DTL 2 constuction is well underway and prospective buyers will automatically put in bids more in line with market valuation. URA should also sell the entire site with vacant possession rather instead of having a running lease attached to the existing commercial space. A white site concept may attract more interesting bids

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