99-year plot may yield 600 units; consultants describe bids as sensible
SIM Lian Land has emerged as the top bidder for a closely contested land parcel in Tampines.
The developer led the field that included familiar names such as CapitaLand, Far East Organization, Frasers Centrepoint and MCL Land in a state land tender as demand for residential land continues to hold strong.
Sim Lian bid $302 million for the 99-year leasehold site at the junction of Tampines Avenue 1 and Avenue 10, which works out to $421 per square foot per plot ratio (psf ppr).
Analysts had previously said that the site could go for anything between $300 and $460 psf ppr.
The next highest bid of $289 million – just 4.3 per cent under Sim Lian’s – was put in jointly by Far East Organization and Frasers Centrepoint. Their bid works out to $403 psf ppr.
The site has a maximum gross floor area of 717,500 sq ft and can yield about 600 housing units. It is the biggest of the eight residential sites up for sale in the first half of this year.
‘The tender for the condominium site at Tampines Avenue 1 is another demonstration of developers’ interest in the mass-market segment,’ said CB Richard Ellis executive director for residential Joseph Tan. ‘Of the eight bids submitted, the first six bids were very close to each other.’
One developer BT spoke to expressed relief that all the bids were ’sensible’, and the ‘let’s get it at all costs’ attitude from developers is beginning to wear off after the government said that it would release more land sites in the second half of the year.
Based on the top bid of $421 psf ppr, the new project will break even at around $700 psf, said CBRE’s Mr Tan.
Caveats lodged for transactions in new projects in the Bedok Reservoir area (such as Waterfront Key and Waterfront Waves) ranged from $700 psf to $850 psf in the last 4-5 months. When the new project is ready for launch in 6-8 months, it could be priced within the same range or even higher, he added.
Donald Han, managing director of Cushman & Wakefield, said that homes on the site could go for about $800 psf. He factored in construction cost of $300-$320 psf.
‘Sim Lian is also a contractor so that means they have a better control over the construction cost,’ said Mr Han.
Source: Business Times, 17 Mar 2010