12-way battle for plum Jurong site Great location

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12-way battle for plum Jurong site Great location

Developers' appetite for land unabated despite cooling measures

Published on Jan 30, 2013

By Esther Teo, Property Reporter


A PLUM Jurong West residential site sparked a 12-way battle among developers although the tough new property curbs seem to have kept bids from going through the roof.

Experts had expected the top bid to range from $540 to $680 per sq ft per plot ratio (psf ppr) when the tender was launched last November, but that was before the cooling measures hit a few weeks ago.

MCL Land submitted the top bid of $438.9 million - or $651 psf ppr - for the 99-year leasehold residential site on Jurong West Street 41.

That was at the upper end of the range but MCL Land chief executive Koh Teck Chuan told The Straits Times that the measures did have a dampening effect on the bids.

"Given the last few tenders, we would probably have seen bids above $700 psf ppr without the measures. Developers have taken into account the cooling measures and are taking a more measured approach, but they are not bearish," he added.

The MCL bid was just 3 per cent more than the $424.9 million - or $631 psf ppr - offered by UOL Group unit Secure Development.

Other bidders for the 22,357 sq m plot included a joint bid by Frasers Centrepoint, Far East Orchard and Sekisui House, Low Keng Huat and Mezzo Development, which lodged the lowest bid of $243.8 million - or $362 psf ppr.

MCL's Mr Koh said the project will have 650 to 700 units of one- to four-bedroom apartments.

Experts said the strong showing in the tender indicates that developers still want good sites.

The Jurong plot is 450m from the Lakeside MRT station, which will eventually be linked to the Jurong Region Line, and there will be clear views of Jurong Lake, noted CBRE's executive director of residential, Mr Joseph Tan.

"The keen interest from developers resulted in bids coming in very close. The top six bids were within 10 per cent of each other," he added.

"This shows that developers are still on the hunt for sites with good location attributes and demonstrates their confidence that the market will respond positively to the project."

Based on the competitive number of bids and high land prices submitted in the tender, it seems that some developers do not expect private home prices to fall in the next one year or so despite the latest measures, added Mr Nicholas Mak, head of research at property consultancy SLP International.

Colliers International's director of research and advisory services, Ms Chia Siew Chuin, said that "there appears to be no loss of optimism from developers" for the first tender of a pure residential site after the punitive cooling measures were unveiled on Jan 11.

"Buyer demand should come from professionals working in the industries in the Jurong and Tuas areas as well as upgrader demand from the Housing Board estates in Jurong East and Jurong West," she added.

Mr Ong Teck Hui, Jones Lang LaSalle's national director of research and consultancy, expects average selling prices for the launch to be close to $1,200 psf or higher.

Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group, notes that while Jurong East will be the biggest commercial hub outside the central business district, it has limited land parcels for residential development.

Those who want to live near the hub might have to look to Jurong West instead. The Canadian International School next to the site also provides a good catchment of tenants, he added.

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Published January 30, 2013

Condo site near Lakeside station attracts 12 bids

MCL's top bid would have been even higher if not for cooling move: CEO

By Kalpana Rashiwala


A 99-year private condo plot about 450 metres from the Lakeside MRT station attracted 12 bids yesterday, in an indication that developers' interest in prime suburban sites may not have been curbed by the round of property-cooling measures unveiled this month.

However, industry players and market watchers offered mixed readings of MCL Land's top bid of $651.33 per square foot per plot ratio (psf ppr), which was 3.3 per cent above the second highest bid of $630.57 psf ppr from the UOL Group. The top six bids were within a 10 per cent range.

Some property consultants said MCL's bid exceeded their expectations; in November, when the site was launched, they had forecast that the winning bid would come in at up to $600 psf ppr.

For one consultant at least - Jones Lang LaSalle's national director Ong Teck Hui - MCL's bid came in at the mid-point of his November forecast of $630 to $680 psf ppr.

Even then, he commented that "the tender result shows that market confidence has not been dented by the latest cooling measures, effective Jan 12 - at least for the higher bidders".

Some developers said yesterday's top bid would have been even higher if not for the cooling measures.

SLP International executive director Nicholas Mak said: "Based on the relatively high number of bids and high land prices submitted in today's tender, some developers do not expect private residential property prices to fall in the next one year or so, despite the latest severe market cooling measures."

The site, bounded by Jurong West Street 41 and Boon Lay Way, is next to the Canadian International School; it is also adjacent to another condo plot available for application under the government's reserve list.

Koh Teck Chuan, chief executive of MCL Land, told BT that if not for the latest cooling package, the group's bid would have been higher - probably $710 to $720 psf ppr.

In May last year, MCL paid $705 psf ppr for a condo plot near Jurong East MRT station, where it is developing a 738-unit project; this is expected to be launch-ready by mid-year.

Suburban residential land prices have moved up since last May, Mr Koh pointed out. Moreover, the Jurong East location, where a new commercial hub is coming up, offers more "positive attributes" than the area around Lakeside MRT station two stops away. He noted, however, that the Lakeside plot would have a plus in the form of unobstructed views of Jurong Lake.

"We bid lower for the Lakeside land parcel than we would have if there had been no cooling measures because, No 1, we'll have to factor in a slower pace of sales and, No 2, we'll have to pay development charges for the private enclosed space and roof terrace."

Mr Koh agreed with some property consultants' suggestion that, based on its $651 psf ppr bid yesterday, MCL could break even at about $1,050 psf and look at posting an average selling price of around $1,300 psf.

ERA Realty Network's key executive officer Eugene Lim said that units in Lakefront Residences nearby are changing hands in the subsale market at between $1,100 and $1,300 psf.

Savills Singapore research head Alan Cheong said: "Perhaps the presence of the Canadian International School next door could be a strong selling point for this project ... Nevertheless, the participation of 12 bidders for the first pure residential site at a state tender post ABSD 2 is a strong testament that developers still have unshakeable faith in the residential market."

He was referring to the latest raft of cooling measures, in which additional buyer's stamp duty (ABSD) rates were raised to curb residential property investment and foreign buying.

Mr Cheong suggested: "Moving ahead, sentiment and developers' appetite for land could improve further, after the release of the latest projected population parameters contained in the White Paper."

CBRE executive director Joseph Tan, noting that the top six bids at yesterday's tender were within a 10 per cent range, said: "This shows that developers are still on the hunt for sites with good location attributes; it also demonstrates their confidence that the market will respond positively to the project."

Analysts noted that the 12 bids at yesterday's tender were identical to the number of bids received for the Jurong East tender last May as well as the tender for a site in Ang Mo Kio Avenue 2 near the future Mayflower MRT station, which closed on Jan 8 with a top bid of $790 psf ppr.

SLP's Mr Mak described MCL's bid yesterday for the Lakeside plot as "aggressive", and designed "to ensure its market position in the Jurong area when its condo projects are launched in the near future".

Yesterday's tender was supposed to have closed on Jan 15, but the Urban Redevelopment Authority postponed it to yesterday to give developers more time to weigh the impact of the measures.