CapitaLand to remain aggressive but disciplined in land bidding: CEO

August 4, 2017

Lee Meixian

CAPITALAND will continue to be "aggressive but disciplined" when tendering for land to bulk up its Singapore residential land bank, president and group CEO Lim Ming Yan said at the company's results briefing on Thursday.

This was in response to an analyst's question regarding its bullish bid for a mixed-use Bidadari site, which was eventually sold to a consortium linked to Singapore Press Holdings and Kajima Development for S$1.132 billion, or S$1,181 per sq ft per plot ratio (psf ppr), in June.

CapitaLand came in fifth in the tender. It submitted the bid through its 50-50 joint-venture (JV) companies with Yanlord Land, called Blossom Commercial Development and Blossom Residential Development. The JV companies' bid of S$958.1 million translated to about S$1,000 psf ppr.

The analyst considered the bid bullish because it implied a breakeven price of about S$1,700 psf, meaning launch prices would be much higher than the average S$1,450 psf and S$1,770 psf for units sold at CapitaLand's other projects, Sky Habitat and Marine Blue, this year.

In July this year, Blossom Residential Development came in fourth in another hotly contested tender for a plot of land at Woodleigh Lane. It was sold to Chip Eng Seng for S$700.7 million, or S$1,110 psf ppr. The JV missed by a 3.6 per cent margin.

On the Bidadari site, which is located in an up-and-coming housing estate, Mr Lim said: "In this particular site, there are certain attributes that will allow us to achieve certain returns, therefore we were comfortable to bid at that value."

He also stressed the need for bids to be competitive. "If you are hoping for a bargain purchase in the Singapore residential market, you will never get anything. . . We intend to put our best foot (forward) in the Singapore residential market, but at the same time, we have to remain disciplined because we still need to generate a reasonable level of returns for our shareholders."

He also noted that market indicators are at an inflexion point, with residential transaction volume picking up, and the rate of price decline slowing. At the same time, many other markets outside Singapore - including Hong Kong, London and Australia - have implemented property market cooling measures.

"So balancing everything, I suppose there is still a lot of liquidity in the market looking for a home to park the money in. This is very much something that is liquidity driven, very much capital market driven, so we have to look at all these, and we have to balance ultimately the risk-reward of investing in a project like this in Singapore," he said.