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Thread: Record bid for Bishan site polarises views

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    Default Record bid for Bishan site polarises views

    http://www.businesstimes.com.sg/sub/...27768,00.html?

    Published February 25, 2011

    Record bid for Bishan site polarises views

    CapitaLand's $869 psf ppr bid is 27% above KepLand's

    By KALPANA RASHIWALA


    (SINGAPORE) CapitaLand yesterday set a new record for 99-year-leasehold suburban condominium land, bidding $869.36 per square foot of potential gross floor area for a plum condo site near Bishan MRT Station and the group's Junction 8 mall.

    The property giant's bid was a whopping 27 per cent or about $118 million above the next highest offer, from fellow Temasek stablemate Keppel Land, which bid $683 per square foot per plot ratio (psf ppr).

    The site - one of the most attractive on the Government Land Sales (GLS) Programme - drew 19 bids in one of the best showings for a state tender for private housing land.

    However, a wide spread in the bids also reflects a divergence of views on the market outlook. CapitaLand's top bid was about 2.6 times the lowest offer of about $337 psf ppr from a unit of Hiap Hoe group.

    'The two Temasek-linked companies seem to be more optimistic than other key developers, who are familiar with this market segment,' said Knight Frank chairman Tan Tiong Cheng.

    A developer lamented: 'On the one hand, government is trying to tame the property market and here we have two TLCs putting in the most aggressive bids at a state tender. So it leaves us wondering where property prices will go next.'

    Most analysts estimate CapitaLand's breakeven cost at about $1,300 psf.

    'The top bid for the Bishan site suggests that the developer is looking to sell the units at around $1,400 psf,' said CBRE Research executive director Li Hiaw Ho.

    Units in Centro Residences at Ang Mo Kio Central have sold at $1,200-1,400 psf, according to caveats lodged between October last year and January this year. 'We expect the new project to be able to attract upgraders in Bishan, Toa Payoh and the nearby landed estates as well as farther afield when it is launched.'

    Due to the site's high 4.9 plot ratio (ratio of maximum gross floor area to land area), the future development can likely reach 40 storeys and residents on the upper floors can enjoy a good view as far as MacRitchie and Lower Peirce reservoirs, Mr Ho added.

    Knight Frank's Mr Tan said the 27 per cent spread between the top two bids at yesterday's tender was the highest for a 99-year high-rise condo plot since property cooling measures were introduced by the government over the past year. 'But this is also one of the best sites on the GLS Programme.'

    Analysts said CapitaLand's bid amount also reflects the property giant's hunger for investments. The group's president and CEO Liew Mun Leong said earlier this week it is looking at $5-6 billion new investments in 2011. Ironically, Mr Liew then also pointed to the risk of overpaying for sites through 'blind tenders' for state land sales unlike private treaty negotiations for collective sales.

    Yesterday, a CapitaLand spokesman said: 'We are confident that the project will be well-received by homebuyers. The site is in one of the most desired residential estates in the central region of Singapore, in the heart of the popular Bishan residential area.'

    The proposed development will have about 600 units and be at least 36 storeys high, she added.

    Most property consultants had expected top bids to come in at around $600 psf ppr. City Developments yesterday bid at about $661 psf ppr. A consortium that includes Far East Organization, which has developed condo projects in Bishan, bid about $508 psf ppr. Sim Lian, which also has experience in the location, offered around $423 psf ppr.

    Yesterday's tender also saw new participants from overseas - Hong Kong's Shun Tak Holdings teamed up with MCL Land to bid $575 psf ppr. Bandar Raya Developments from Malaysia partnered local developer Novelty group for a $600.54 psf ppr bid. China developers MCC Land and Qingdao Construction placed separate bids of $676 psf ppr and $633 psf ppr respectively.

    The bullish top bids yesterday led SLP International executive director Nicholas Mak to suggest: 'This may push the authorities closer to formulating more cooling measures. But they'll probably look at the next few land tenders first.'

    An analyst said: 'These are the signs that will draw potential buyers who have been waiting on the sidelines back to the market - when they see launches doing reasonably well and bullish land bids which means prices are likely to go even higher.'

    Said Urban Redevelopment Authority's group director (land sales and administration) Marc Boey: 'The wide spread of bids at the tender reflects the divergence of views among developers on the impact of the latest round of cooling measures on the property market going forward.

    'Bids which are towards the lower end of the range may reflect the dampening effect of the measures and greater caution.'

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    Default 19 bids for Bishan site, top offer $550m

    http://www.straitstimes.com/Money/St...ry_638638.html

    Feb 25, 2011

    19 bids for Bishan site, top offer $550m

    CapitaLand's top bid for site near MRT station beats market expectations

    By Cheryl Lim


    A PRIME slice of government land near Bishan MRT station sparked a bidding war that involved 19 bids and delivered a top offer that was nearly double the market expectations.

    The remarkable turnout - the largest since 32 bids squared off over a Jurong West site in 2009 - shows the level of confidence in the property market despite last month's cooling measures.

    Analysts had expected a price of $303 million for the residential site, but CapitaLand easily trumped that with an offer of $550 million, or $869 per sq ft per plot ratio (psf ppr). The property giant wants to build a high-rise condo of at least 36 storeys with 600 units.

    CapitaLand was up against a who's who of local and regional developers, including Keppel Land, Far East Organization and Beijing-based MCC Land (Singapore), as well as mid-sized and boutique players such as Teneriffe Development.

    Its bid for the 129,136 sq ft plot was about 27 per cent higher than second-placed Keppel Land's, while the lowest bid came in at $213 million.

    There is some irony in CapitaLand's stratospheric bid, given chief executive Liew Mun Leong's remarks in a newspaper report last month: 'We are amazed at the prices that come out (in government land tenders),' he said then. 'Not that we are jealous... but when we look at the numbers, we know that we can't do it... So in a way, we agree that there is some speculative chasing for land.'

    The site was the second major tender that closed after the Jan 13 cooling measures.

    Last week, a 30ha mixed-use site in Punggol was sold for a record price of $1.02 billion, or $753 psf ppr.

    The results of both tenders indicate that developers are still confident there is demand from buyers and long-term investors, said market watchers.

    Prime sites in mature estates are hard to come by, said Cushman & Wakefield vice-chairman Donald Han, and this could explain why developers were willing to pay a premium for this property.

    Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, agreed: 'Properties in good locations, like the Bishan site, tend to be able to weather economic conditions and price corrections better as compared with other plots. Developers are prepared to pay more for a choice location that will sell well easily.'

    Mr Han said CapitaLand could 'create synergy' with Junction 8 Mall, which is owned and operated by its unit CapitaMall Trust. He pointed out that the developer has experience in similar projects.

    Mr Liew earlier said he would be keeping an eye on residential sites in the Government Land Sales Programme this year.

    Earlier this week, CapitaLand had also said it was prepared to sink up to $6 billion into new investments.

    Knight Frank's head of consultancy and research Png Poh Soon estimates the project could sell for up to $1,700 psf.

    Last month's sales at nearby condo Clover By the Park was at an average of $967 psf, while Centro Residences in Ang Mo Kio sold for an average of $1,412 psf.

    However, Mr Han does not believe it will cause prices of nearby HDB flats and private homes to go up. 'The impact will be quite minimal. While the location is important, other factors like the project's design, facilities, apartment layout and target audience may affect the average price a project will eventually sell for,' he said.

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    So how now, brown cow?

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    Quote Originally Posted by Geylang OKT
    So how now, brown cow?
    The brown cow is bullish haa haa

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    Whoever who strategise this bid should be fired. It is close to 30% higher than the second bid while the rest of the bids are very close. Capitaland would have won the bid at $690psf - even cheaper than the Punggol site. The guy who did the valuation should be shot.

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    Bedok Central CAPL bid 788,888,888 but could have won at 688,888,888. This time around could have won with 488,888,888

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    CAPL should have hired me for the valuation remember I bet 700 ? That would have been a perfect price. Save Liew 100 million. My fee is only 1 million

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    So clever. LOL

    Quote Originally Posted by amk
    CAPL should have hired me for the valuation remember I bet 700 ? That would have been a perfect price. Save Liew 100 million. My fee is only 1 million

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    The strategist probably read this forum for some ideas on where the competitors were coming in at.

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    I still think that this punggol site is overpriced. Oh well...
    Yee ha! Did I tickle your funny bone?


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    I still think that this punggol site is overpriced. Oh well...

    I bet they are bidding for the Bendemeer site too and likely to be 700m.
    Yee ha! Did I tickle your funny bone?


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    That's why we should use an open auction instead of a closed auction. In an open auction (e.g. HK), you are aware what competitors are bidding and there is less likelihood of outrageous bids. In a closed auction, all developers will just put in the highest board approved price which sometimes lead to runaway prices. For instance, had this been an open auction, Capitaland wd hv known the highest price Keppel can go is only $683psf, they would have secured the site at $700psf as Keppel had no approval to go any higher. From a consumer perspective, an open auction is definitely more transparent and less likely to lead to over-zealous developers passing on high prices to consumers. There might be some loss of revenues for the government but sometimes consumer interest should prevail.

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    If open auction, some competitors might be urged to bid higher.

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    Quote Originally Posted by Wild Falcon
    That's why we should use an open auction instead of a closed auction. In an open auction (e.g. HK), you are aware what competitors are bidding and there is less likelihood of outrageous bids. In a closed auction, all developers will just put in the highest board approved price which sometimes lead to runaway prices. For instance, had this been an open auction, Capitaland wd hv known the highest price Keppel can go is only $683psf, they would have secured the site at $700psf as Keppel had no approval to go any higher. From a consumer perspective, an open auction is definitely more transparent and less likely to lead to over-zealous developers passing on high prices to consumers. There might be some loss of revenues for the government but sometimes consumer interest should prevail.
    Difficult to say. Keeper may price even higher or even mcc can be even more aggressive. Why mcc din bid higher could be that they don't have a feel of the price.

    But I agree that open tender has more transparency. Remember Coe $1? Now where got such thing? So maybe the land cost should be even higher?

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    why not use dutch auction?

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    dutch auction is more suitable for lelong lelong items.

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    Hmm.... so means what?

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    close forces developers to basically show hand. open is a advantageous to the winning bidder in most cases cos it'll probably be lower than their otherwise highest bid. but frankly, even if the winning bidder gets it at a lower than their intended highest bid, in this market, they may not pass that cost savings on to the home buyer.

    dutch is definitely not suitable.

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    CapL need this site badly to have the same concept as Bedok. All in bus terminal, mrt stn and the mall concept (already under their management). The current station will be air-conditioned like toa payoh, clementi, etc.

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    Quote Originally Posted by DC33_2008
    CapL need this site badly to have the same concept as Bedok. All in bus terminal, mrt stn and the mall concept (already under their management). The current station will be air-conditioned like toa payoh, clementi, etc.
    Dont think CapL need this site badly or desperate. They are just making a business decision with a long term view. There are many ways to milk the car.....If this place is a cash cow, they are willing to pay more. Dont forget, there is only one bedok and one Bishan......

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