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Thread: Kovan residential site draws top bid of $194.6m

  1. #1
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    Default Kovan residential site draws top bid of $194.6m

    http://www.businesstimes.com.sg/sub/...74339,00.html?

    Published January 19, 2012

    Kovan residential site draws top bid of $194.6m

    Hoi Hup consortium offers $507 psf ppr; tender attracts 11 bids

    By MINDY TAN


    (SINGAPORE) Suburban sites continue to receive keen interest in spite of market cooling measures and the wider economic uncertainty.

    Yesterday's tender closing for the prime residential site at Kovan Road/Simon Road garnered 11 bids, of which a consortium comprising Hoi Hup Realty, Investment Focus, and Oriental Worldwide Investments emerged the top bidder.

    Its bid of $194.6 million translates to about $507 per square foot per plot ratio (psf ppr).

    Credo Real Estate executive director Ong Teck Hui noted that the top bid is 'roughly in line' with recent tenders for residential sites in Clementi ($554 psf ppr) and Mt Vernon ($495 psf ppr).

    This, he said, 'appears to be the current land price range for good suburban residential sites'.

    The site, which has a 99-year lease period, has an area of about 1.7 hectares, and a gross floor area (GFA) of about 384,142 square feet.

    'The healthy list of bidders from this and recent tenders shows that developers are confident, and that their balance sheets are strong enough to weather through concerns that the ABSD (additional buyer's stamp duty) will lead to abject market conditions,' said Alan Cheong, head of research at Savills Singapore who estimated the project's breakeven cost to be about $980 psf.

    Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group, added that the keen contest shows that attractively located sites will continue to draw strong participation from developers despite the uncertain market conditions.

    'The breakeven for the site could be between $900 and $1,000 psf . . . The developer could be looking at a price range between $1,100 and $1,300 psf,' he added.

    According to a spokesman from Hoi Hup, the consortium intends build a condominium comprising fewer than 400 units. They include a mix of Soho-style units and townhouses.

    The project should be launched later this year.

    The tender's second highest bidder was a group made up by Frasers Centrepoint's FCL Topaz, F E Lakeside and Sekisui House Singapore. Their bid of $192.8 million translates to some $502 psf ppr.

    Li Hiaw Ho, executive director at CBRE Research, expects units on the site to fetch between $1,100 and $1,200 psf, citing the location's strong attributes.

    'The site is less than five minutes' walk to Kovan MRT station on the North- East Line. It is surrounded by an established landed housing estate and low-rise apartments or shophouses. Kovan Melody and Kovan Residences are also situated nearby. Shopping and retail outlets are available at Heartland Mall-Kovan and Hougang HDB estate,' he said.

    SLP International research head Nicholas Mak noted: 'There has been no new major condominium launched in the Kovan area since the launch of Kovan Residence in June 2008. After the sale of this site, there is also an absence of another major condominium development site near the Kovan MRT station.'

    Other bidders included UOL unit, United Ventures Development, which placed a bid of $180.8 million ($436 psf ppr), and Mezzo Development, which submitted the lowest bid of $128 million ($333 psf ppr).

  2. #2
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    Are small land sites still attractive?

    Tenders will keep on coming says Savills after a surprising turnout for a pocket residential site.
    The Kovan Road / Simon Road residential site received 11 bidders despite the gloom-and-doom outlook on home sales.
    Savills took this resilient bidding as representative of relatively smaller land parcels, which it expects to ride out the storm.
    "With 11 bidders for this site, it shows that for land with bite sizes of less than S$200 million, will continue to attract a number of bidders," said Alan Cheong, Head of Research at Savills Singapore, in its comments to the tender closing.
    "The healthy list of bidders from this and recent tenders also show that developers are confident, that their balance sheets are strong enough to weather through concerns that the ABSD will lead to abject market conditions," he added.
    Mr. Cheong went on to analyze the cost implications for the winning bid, including a margin forecast hovering in the 40%.
    "Our estimate for the project’s breakeven cost is about S$980psf. With 900 – 1,000sq ft units at Kovan Residences transacting around S$1,350 psf and the Bliss @ Kovan going for S$1,400 psf, the 37% - 43% margin is good enough for the top bidders to ride through the current soft patch. However, if this were to be a freehold site, the bid prices may be higher as the supply of freehold projects in the mid-to-mass market sector is limited," he said

  3. #3
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    Default Kovan site fetches top bid of $194.6m

    http://www.straitstimes.com/Money/St...ry_757289.html

    Kovan site fetches top bid of $194.6m

    Published on Jan 19, 2012

    By Cheryl Lim


    THERE was keen competition with 11 bids submitted, but the prices offered for a residential site in Kovan were in line with market expectations.

    The top bid of $194.6 million was submitted by a consortium made up of Hoi Hup Realty, which is owned by Straits Construction, and two other Straits Construction units.

    Their offer - which works out to $507 per square foot per plot ratio (psf ppr) - was just $1.8 million higher than the next bid, submitted by a Frasers Centrepoint, Far East Organization and Sekisui House consortium.

    Recent tenders have achieved winning bids of a similar price level, said Mr Ong Teck Hui, Credo Real Estate's head of research and consultancy.

    Last Thursday, a Clementi site was sold for $554 psf ppr, while a nearby Mount Vernon plot achieved a top bid of $495 psf ppr on Jan 10.

    Mr Alan Cheong, head of research at Savills Singapore, told The Straits Times: 'The healthy number of bidders from this and recent tenders also showed that developers are confident that their balance sheets are strong enough to weather concerns that the (latest property cooling measures) will lead to abject market conditions.'

    The Kovan plot at the corner of Kovan and Simon roads is a stone's throw from the Kovan MRT station and Heartland Mall and is a short drive to Nex shopping mall.

    The 99-year leasehold plot, which measures 182,924 sq ft with the potential to accommodate 360 units, is seen by market watchers as an attractive suburban site.

    Mr Ong also pointed out that 62 of the 92 caveats lodged for neighbouring Kovan Residences were sub-sales.

    'This indicates that there is likely to be good buying interest in the area which a new development could capitalise on.'

    Units at Kovan Residences are transacting at between $1,100 and $1,300 psf. Analysts expect the upcoming project to sell at similar levels.

    Mr Nicholas Mak, head of SLP International's research department, said developers are acquiring sites at lower values and this could either lead to lower prices for new homes or greater profit margins.

  4. #4
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    Yet another over 1k psf condo....

  5. #5
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    Is this tthe grass patch behind kovan residences?

  6. #6
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    then Kovan melody and residences should sell for 1200psf since they are nearer?

    Crazy...

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