Tuesday, August 25, 2009

Serangoon site gets $83.7m bid

It is fourth residential plot triggered for sale since last month

ANOTHER suburban residential site on the Government's reserve list has been triggered for sale, signalling rising developer confidence.

Yesterday, an unnamed developer put in the minimum acceptable bid of $83.7 million, or some $200 per sq ft (psf), for a 1.39ha site in Serangoon Avenue 3.

Property consultants expect to see tender bids coming in at much higher levels because the site is in an established residential area near an MRT station. The 99-year leasehold site is near Lorong Chuan station - one of the first five stations to open on the Circle Line - as well as the Australian International School.

It has a maximum gross floor area of 38,857 sq m, according to the Urban Redevelopment Authority, and can accommodate an estimated 370 housing units.

Nearby condominiums include Chiltern Park, Chuan Park and The Springbloom.

Colliers International director of investment sales Ho Eng Joo expects to see about 10 developers bidding for the site.

'Sentiment is very strong and there are no sizeable private sites available for en bloc sales. Developers are thus going for the government sites as they need to replenish their land banks.'

Strong demand at recent suburban launches has shrunk the pipeline of such condos, Mr Ho added.

Cushman & Wakefield managing director Donald Han said developers are now in a more buoyant mood and looking to replenish their land banks.

'We have been seeing site after site being triggered since July; it shows that the reserve list is working and helping to provide a steady stream of supply.'

Bids for the Serangoon Avenue 3 plot are likely to range from $100 million, or $240 psf per plot ratio (ppr), to $132 million, or $315 psf ppr, predicted property consultant Nicholas Mak, who is expecting between five and 12 bidders.

Mr Han and Mr Ho are more bullish about price and are expecting bids to come in at as high as $350 psf and $400 psf respectively.

With such bids, break-even levels may range from $600 to $700 psf, and the successful developer could be looking to sell the new units at $750 to $850 psf each.

The Serangoon Avenue 3 site - the fourth plot for residential use triggered for sale since last month - was made available for sale via the reserve list system.

Under this sale method, a site goes up for tender only if developers indicate interest by committing to a minimum bid.

Last week, a tender for a suburban condo plot in Chestnut Avenue attracted an impressive 13 bids of which the highest was at $280 psf of gross floor area.

The response was stronger than expected given that the site is located at quite a distance from the nearest LRT station.

Source: Straits Times, 25 Aug 2009

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