Tampines Ave 10 site sees 10-way bidding war

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http://www.straitstimes.com/archive/...g-war-20130717

Tampines Ave 10 site sees 10-way bidding war

Winning bid of $289.7 million by Chinese developer surprises analysts

Published on Jul 17, 2013


A fiercely-fought tender involving 10 developers for a plot in the Tampines Avenue 10 area has stunned the market with a top bid of $289.7 million. The bid was 34 per cent higher than an adjacent site sold in May last year, where Far East Organization's Q Bay is now being built. -- ST PHOTO: KEVIN LIM

By Cheryl Ong

A FIERCELY-fought tender involving 10 developers for a plot at Tampines Avenue 10 has stunned the market at its close yesterday, with a top bid of $289.7 million.

Analysts said that the competition for the 17,102.9 sq m plot was unexpected given the new rules to prevent borrowers looking to sign new mortgages from over-extending themselves.

The top bid for the plot designated for residential development was from Chinese developer MCC Land, whose bid translates into a price of $562 per sq ft (psf) per plot ratio (ppr).

This was 7.6 per cent more than the next highest bid submitted by a tie-up between UOL Venture Investments and Kheng Leong Company - at $522 psf ppr.

Jones Lang LaSalle's national director of research and consultancy Ong Teck Hui said that the top bid for the 99-year leasehold site was "way above expectations".

He noted that that it was 34 per cent higher than an adjacent site sold in May last year, where Far East Organization's Q Bay is now being built.

The tender outcome indicated that developers remain confident of underlying robust demand, despite the latest lending rules imposed by the Monetary Authority of Singapore, Mr Ong added.

"In terms of the number of bidders participating in the tender, it's a vast improvement from the Q Bay site, where only three bidders participated," said OrangeTee's head of research and consultancy Christine Li.

Ms Li said developers may have been swayed to throw in high bids by the overwhelming demand for J Gateway in Jurong East last month, where 99 per cent of the units there were sold on the first day of its launch.

Analysts also said that MCC Land was determined to secure the plot as it plans to diversify from the northern region, where most of its residential projects are located. The plot is near Temasek Polytechnic, the Tampines Regional Centre and the upcoming Tampines West MRT station. It is expected to yield 530 units.

The estimated breakeven price is expected to be between $940 psf and $990 psf, and MCC Land might launch its project at a price above $1,100 psf, said SLP International's executive director Nicholas Mak.

ERA's key executive officer Eugene Lim expects demand for the upcoming development from MCC Land to come mainly from first-time home buyers as this segment is unaffected by the new MAS rules.

The tender was previously scheduled to close on July 2, but was extended until yesterday.

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http://www.businesstimes.com.sg/arch...lysts-20130717

Published July 17, 2013

Tender for Tampines Ave 10 plot surprises analysts

Site attracts 10 bidders, despite new MAS rules on debt servicing

By ong chor hao


[SINGAPORE] The first private residential site tender to close since a new debt servicing framework for property loans was introduced has drawn strong demand, surprising analysts who expected greater caution.

Ten bidders contested for the 99-year leasehold site (parcel B) at Tampines Avenue 10, the Urban Redevelopment Authority (URA) said yesterday.

The highest offer came from MCC Land (Singapore), at $562.01 per square foot per plot ratio (psf ppr), or $289.7 million in absolute terms.

This was 7.6 per cent higher than the next highest bid of $522.24 psf ppr, or $269.2 million, from a partnership of UOL Venture Investments and Kheng Leong Company.

"The tender results are shocking," said Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle (JLL).

Analysts zoned in on the size of the top bid, which was 34 per cent higher than the adjacent site where Q Bay Residences will be. That plot sold for about $418 psf ppr last May. Also, only three bids were put in.

It led consultants to predict earlier only three to six bidders and a top bid in the range of $400 psf ppr to $470 psf ppr. They also noted that the plot was not near an MRT station, and there are several other projects in the area.

Eugene Lim, key executive officer at ERA Realty, said the results yesterday showed that developers are "still hungry for land sites to build their land bank", even after the Monetary Authority of Singapore put in place the total debt servicing ratio (TDSR) framework for all property loans starting on June 29.

URA had extended the deadline for the tender for the Tampines Avenue 10 plot from July 2, to give developers more time to consider the new rules.

But it appeared to have little impact.

"The top bidders are obviously optimistic about market outlook and confident that pricing will hold or perhaps edge up a little," Mr Ong from JLL said. The confidence stems from the rebound of the housing market after each round of measures, he said.

Christine Li, head of research and consultancy at OrangeTee, said developers may also have been encouraged by the J Gateway condominium in Jurong selling out, as well as plans to develop Tampines North.

When contacted, an MCC Land spokesman said: "We are still confident about the mass market housing segment and intend to develop a condominium project with about 500 units on the site".

Analysts are expecting a breakeven price of $940 psf ppr to $1,050 psf ppr, with a selling price above $1,100 per square foot (psf). Average selling prices at Q Bay is around $1,022 psf, Religare Capital Markets data shows.

Nicholas Mak, head of research and consultancy at SLP International, said the tender yesterday shows land prices are still rising. This may not bode well for tenders of three executive condominium sites which will close on July 30. The government chose to close them on the same day to moderate prices.

But Mr Mak said that "initial experiment could fail when the tender results are unveiled", if the results yesterday is an indication of bullish sentiments from developers.

Higher land prices are trapping developers too.

With fewer home sales expected for the year and prices expected to fall, Tata Goeyardi, head of Asean real estate research at Religare Capital Markets, said Singapore developers remain in "a no-win situation where a drop in prices and volumes could hurt their margins while the failure of any such price corrections could likely drive more measures from the government".