EC site may fetch lowest price since 2011

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EC site may fetch lowest price since 2011

Published on Jan 21, 2015 1:56 AM

By Rennie Whang


THE top bid at a tender for a Sengkang executive condominium (EC) site that closed yesterday will, if successful, be the lowest EC land price since July 2011, consultants noted.

The tender for the 1.75ha site in Anchorvale Crescent attracted just three bids, reflecting a cautious market outlook amid weak sales and ample supply.

Sim Lian Land's top offer of $157.8 million, or $280 per sq ft (psf) per plot ratio (ppr), was the lowest since the Twin Waterfalls EC site in Punggol Field was sold 31/2 years ago at $270 psf ppr.

It was also well below the initial estimate of $180 million to $203 million, or $320 to $360 psf ppr, said Mr Nicholas Mak, SLP International's executive director. Sim Lian's bid was 9.7 per cent higher than the second bid by Allgreen Properties.

Yesterday's tender for the site, which can yield 525 homes, was in stark contrast with the most recent EC site sold in the area.

The Vales, across the road, was sold in February last year for $367 psf ppr or 24 per cent more, and fetched a bullish 12 bids, said Mr Ong Teck Hui, JLL national research director.

It appears developer sentiment has weakened significantly since. The last tender for an EC site - in September last year - closed with just two bids for a 2.8ha site in Sembawang.

Islandwide, a record 2,000 EC units have been launched but remained vacant as at Dec 31 last year, said Mr Desmond Sim, CBRE research head for South-east Asia.

"There are, in the near future, at least 6,000 units in the pipeline, of which 1,700 are located in the north- east," he added.

Indeed, the Sengkang and Punggol area is home to the highest concentration of new EC projects. Prior to the latest site, 14 EC sites have been sold in the area, said Mr Ong of JLL.

The take-up rate at EC projects has also been muted.

In Punggol, nearly 600 of 747 units are unsold at The Terrace EC, which launched on Dec 7.

At the end of last year, 465 of 651 units were unsold at Bellewaters EC in Sengkang, which was launched in November, 64 units were unsold at Waterwoods EC (launched November 2013) and 54 units at Ecopolitan EC (July 2013).

If the latest site is eventually sold to Sim Lian at $280 psf ppr, break-even price for the project could be $640 to $660 psf, noted Mr Mak.

This would allow Sim Lian to launch at prices undercutting other projects in the area.

Ms Christine Li, research head at OrangeTee, said the trend of developers "fishing" for low winning bids could continue. "Given current tepid market conditions, we may possibly also see this behaviour extend into land tenders for private residential plots."

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Exec condo land bids slump to lowest since 2011

Bids for Sengkang parcel come in below expectations; Sim Lian's top bid 24% below price of nearby plot last Feb

By Kalpana Rashiwala

[email protected]@KalpanaBT

21 Jan


THE generally weak sales at most executive condo launches in recent months are eroding developers' confidence in this market segment.

Sim Lian's top bid of S$280.04 per square foot per plot ratio (psf ppr) on Tuesday, for a 99-year leasehold EC site along Anchorvale Crescent in Sengkang, was 24 per cent lower than the S$367 psf ppr that SingHaiyi paid for a neighbouring plot in February last year (which it will develop into The Vales project). That tender drew 12 bids - against just three at the latest tender.

Moreover, Sim Lian's highest bid marks the lowest pricing for EC land since July 2011, when the Twin Waterfalls plot in Punggol fetched S$270 psf ppr, property consultants noted.

The other two bidders at Tuesday's tender were Allgreen Properties, which bid S$143.89 million or around S$255 psf ppr, while Victoria Realty - owned by Tan Koo Chuan and Melvin Poh - offered S$126.80 million or S$225 psf ppr for the 1.75-hectare site, which can yield an estimated 525 homes.

ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions that are fully lifted 10 years after the completion of the project.

The December 2013 introduction of a 30 per cent mortgage service ratio cap on EC units bought from developers has clipped the wings of many potential EC buyers. Moreover, noted OrangeTee research head Christine Li, "developers are discouraged by poor take-up for most EC projects released in recent months - due to ample supply from launches especially in Punggol and Sengkang".

According to market talk, sales at the latest EC launch, The Amore, in Punggol Central, which was released for sale over the weekend, have crossed 20 per cent or close to 80 units in the 378-unit project.

JLL national director Ong Teck Hui too noted the Sengkang/Punggol area has the highest concentration of new EC projects, with 14 sites sold (excluding the subject site) since 2010. "The number of unsold units in this area is around 2,000 and the sales take-up of recent nearby EC launches has not been encouraging. These factors would have also weighed down tender participation as well as bidding quantum."

SLP International executive director Nicholas Mak too said the top bid at Tuesday's tender came in below his initial forecast of S$320-360 psf ppr. "Based on the S$280 psf ppr bid by Sim Lian, it would be able to break even at around S$640-660 psf, allowing it to launch the project on site at a price that would undercut the neighbouring projects," said Mr Mak, alluding to Bellewaters and the yet-to-be-launched The Vales.

Qingjian Realty paid S$331 psf ppr for the Bellewaters site at a tender that closed in late May 2013. "Based on the top bid at today's land tender, EC land price has returned to the level in mid-2011. This is perhaps another sign of a stabilising property market as a result of the government's cooling measures," said Mr Mak

The 1.75-hectare site tendered on Tuesday is near Cheng Lim LRT Station and is estimated to generate some 525 homes.

Ms Li describes the lowest two bids at the tender as "bottom fishing" exercises. She said the current tepid market may see an extension of this behaviour to tenders for private housing land as well.

Developers who are still keen on buying land are still bidding but at very conservative levels.