DEVELOPERS have bid aggressively for a 60-year leasehold industrial site at Yishun Avenue 6 (Parcel 1).
Seven parties had expressed interest by the time the tender closed yesterday. OKH Management put in a top bid of $27.2 million, or $71 per square foot per plot ratio (psf ppr).
The is 2.4 times the trigger price of $11.5 million, or $30 psf ppr, that an unnamed developer had committed to pay in February, prompting the Urban Redevelopment Authority to put the site up for tender.
The second-highest bid, from Soilbuild Group, is not far below the front runner. Soilbuild has offered $25.12 million, or $66 psf ppr.
In fact, five of the seven bids are above $20 million. The other three above this level are from Whye Wah Group, KNG Land and Ho Lee Group.
The bids are ‘unexpectedly high’ and show that developers are bullish, said Knight Frank’s head of industrial business space Lim Kien Kim. ‘The economy is trending upwards, and there is demand for (industrial) space.’
The Purchasing Managers’ Index for March showed that the manufacturing sector expanded for an 11th straight month.
According to a CB Richard Ellis (CBRE) report yesterday, the industrial property market improved in the first quarter. Demand for factory and warehouse space is growing and rents could rise towards the end of the year, CBRE said.
The company’s research executive director Li Hiaw Ho said that the high bids for Yishun Parcel 1 could be due to a lack of industrial sites in the area. ‘No sites in Yishun were awarded under the government land sales programme in the past 10 years,’ he said.
He projects a breakeven cost of about $250-270 psf for development on the site.
Next to Parcel 1 is Parcel 8, the tender for which is ongoing. Mr Lim expects developers bidding for Parcel 1 to bid for Parcel 8 too. A developer could reap economies of scale by getting both plots, he said.
Parcel 1 is zoned ‘Business 1′ and is 152,770 sq ft, with a maximum gross plot ratio of 2.5.
Source: Business Times, 7 Apr 2010
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