32 bids, bumper price

A SMALL site in Jurong West that was withdrawn from sale 21 months ago because bids were too low attracted a record 32 offers and a bumper price yesterday after going back onto the market.

The winning bid for the government plot came in at $38.5 million or $254 per sq ft – more than three times the bids made last year and far higher than even experts had expected in today’s better economy.

While the price lodged by Chappelis – 2.5 times the minimum offer of $15 million – raised some eyebrows, it was the sheer number of bids that stunned property experts.

The 32 that were lodged is more than twice the previous record – the 15 placed on Oct 9 for a Serangoon Avenue 3 land parcel, according to the Urban Redevelopment Authority.

The 14,098.9 sq m site in Westwood Avenue drew bidders of all sizes, from the small players like Fragrance Homes to the big boys such as Far East Organization.

They included Chip Eng Seng’s CEL Development, EL Development, Soilbuild Group, TID and Frasers Centrepoint. Malaysian firm S P Setia International also joined in the competition.

CBRE Research executive director Li Hiaw Ho told the media yesterday: ‘Now that the residential market is performing well, the limited supply of landed sites for development has created substantial demand for this site.’

Chappelis, controlled by United Overseas Bank chairman Wee Cho Yaw’s privately held Kheng Leong Company, bid a tad above the second highest offer of $38 million or $250 psf from a joint venture between Hoi Hup Realty and Sunway Developments.

Act-Nobel Homes was third highest at $35.1 million or $231 psf.

While the top bid is ’steep’, the site is seen as affordable, which appeals to a wide range of developers, including the contractor types, said an industry source.

Credo Real Estate managing director Karamjit Singh said the site hits ‘a perfect sweet spot’ in terms of size and price.

‘It is not too large and it is in a mass market location, but in the landed segment where there is less competition.’

Landed plots of such sizes are hard to come by, he added.

Certainly, the pick-up in the market and better economic outlook were driving demand for the site.

The plot had drawn two low bids – $11.8 million and $10.33 million – early last year and was not awarded.

It was on the confirmed list then and triggered for sale in late October this year. Property consultants predicted bids ranging from $17 million to $30 million.

‘Prices of mass-market condos have gone up so much that many are priced out of the market,’ said a developer who bidded.

‘Apartments are also going smaller so if you have at least $1 million-plus to spend, it may be better to buy a landed property.’

Currently, an apartment of more than 2,000 sq ft would be beyond the reach of many people, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

‘The rental yield of a landed property may not be as high as that of an apartment but you get a good size.’

Based on the top bid, terrace houses on the site would be priced around $1.25 million to $1.3 million to as high as $1.5 million, experts said.

The top bidder is likely to consider cluster housing whereby about 90 strata units can be built, as opposed to around 55 to 60 conventional landed units, they said.

Nearby, houses in Westville and Westwood landed estates are selling in the resale market at $850,000 to $1.1 million each, CBRE’s Mr Li said.

Source: Straits Times, 9 Dec 2009