Originally Posted by
Ringo33
YESTERDAY's tender close was a story of two plots side by side, sold two years apart - one in the 2012 property boom and the other after the government had imposed its seventh round of cooling measures and total debt servicing ratio (TDSR) framework.
The latter, a 99-year leasehold residential site at Prince Charles Crescent (Parcel B), got a highest bid of $463.1 million or $820.65 per square foot per plot ratio (psf ppr), a sharp drop from the $516.3 million or $960.28 psf ppr that its adjacent Parcel A site received two years ago.
The Parcel A site was awarded to Wing Tai's Wingstar Investment, Metro Australia Holdings and UE E&C's unit Maxdin,
which are developing it into The Crest, to be launched possibly next quarter.
Yesterday, the highest bidder for the Parcel B site was a partnership between UOL Venture Investments and Kheng Leong, which plans to develop a 24-storey project with about 750 units.
SLP International research head Nicholas Mak said: "Today's tender result indicates that the multiple government interventions in the property market have finally resulted in cooling the residential land sales market."
The bids for the latest parcel ranged from $660 psf ppr to $821 psf ppr, far lower than The Crest's site, which had bids in the rangeof $806-$960 psf ppr. The two most recent winning bids in the Redhill area were also well above $900 psf ppr (see table).
Most consultants had expected the winning bid to fall in the range of $900-$1,000 psf ppr, except for R'ST Research director Ong Kah Seng who had a more conservative estimate of $800-$900 psf ppr.
Even the number of bidders for the site - seven - was underwhelming and was on the lower end of consultants' expectations, for a prime plot that is a 10-minute drive to Orchard Road and the only confirmed list site in the city fringe under the Government Land Sales programme.
One reason for developers' caution is the ample supply in the area. "The bidders are obviously concerned about . . . the substantial unsold supply in the immediate vicinity and the weak response to new sales launches," said JLL national director Ong Teck Hui.
Nearby, Alex Residences and Mon Jervois are still marketing unsold units while The Crest is expected to launch soon. Mr Ong estimates that the unsold supply in these projects adds up to about 800 units.
Another reason is the additional buyer's stamp duty (ABSD), since most buyers of city-fringe private homes already own a residential property and their TDSR limits can be exceeded if they obtain a large loan to finance their new property, said Mr Ong.
The second highest bid, put up by a consortium comprising Verwood Holdings, Intrepid Investments and Garden Estates, was $440.2 million or $780.07 psf ppr. A partnership between Wingzest Investment and Metro Prop Singapore placed the third-highest bid of $438.5 million or $777.04 psf ppr.
The upside for the winning developer is that the lower land price will give it flexibility in pricing its project, compared to developers of neighbouring projects, said CBRE research head Desmond Sim.
SLP's Mr Mak estimates its breakeven price at $1,300-$1,380 psf, far below transaction prices of $1,650-$1,980 psf of units in the area.
A statement from UOL Group president (property) Liam Wee Sin, after the tender results were announced, revealed as much. He said: "This is a resilient site . . . The development can be priced realistically to entice buyers who are on a lookout for projects with strong locational attributes."
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