http://www.businesstimes.com.sg/arch...erest-20131203
Published December 03, 2013
Reserve-list site in Geylang seen attracting keen interest
Analysts expect top bid to be $580-$750 psf ppr for plum site next to Aljunied station
By Kalpana Rashiwala [email protected]
THE government will be launching two 99-year private housing sites in Geylang this month.
Of the two, the one that is expected to draw more developer interest is a plot next to Aljunied MRT Station which has been triggered from the government's reserve list. The successful applicant has agreed to bid at least $95 million, translating to $505.28 per square foot per plot ratio (psf ppr), at tender for the site, which is along Geylang East Avenue 1.
Besides its choice location (the plot is also next to Geylang Methodist Primary School), the site's relatively small size - 0.62 hectare and expected to generate an estimated 215 homes - and bite-site investment quantum make it more appealing to developers compared with a larger site in the vicinity that will be launched for tender by the Government later this month though the confirmed list.
That land parcel, which has a land area of about 2.4 hectares, is expected to generate an estimated 900 private homes. Fronting Sims Drive, Aljunied Road and the Pan Island Expressway, it is further from Aljunied Station.
The launch of the future project on that site will likely have to be phased as housing sales have generally slowed following the introduction of the Total Debt Servicing Ratio (TDSR) framework in late-June, notes Ian Loh, head of investment and capital markets at Knight Frank.
"As much as developers like economies of scale, the triggered reserve-list site will interest more developers than the one on the confirmed list," he added.
Confirmed-list sites are released according to a prestated schedule regardless of demand, while reserve-list sites are launched for tender only upon successful application by a developer.
Mr Loh predicts that the winning bid for the confirmed list site will be around $600-650 psf ppr, against a top bid of possibly $700-750 psf ppr for the reserve-list site in Geylang East Avenue 1. The latter bid would likely result in an average selling price of about $1,400 psf for the project on site.
Mr Loh's top bid projection for the Geylang East Avenue 1 site is at the high end of market expectations. Donald Han, managing director of Chesterton Singapore, reckons the winning bid will be around $680-720 psf ppr.
OrangeTee's research and consultancy head Christine Li puts the figure at $600-650 psf ppr, while CBRE Research associate director Desmond Sim, at "from $580 psf ppr onwards".
Mr Sim expects the site to receive six to eight bids, while Mr Loh says the site will probably draw more than 10 bids.
OrangeTee's Ms Li said that though the reserve list site is within walking distance from the MRT station, a major challenge in attracting optimistic bids from developers could be "the reputation of the surrounding areas", an allusion to the Geylang red-light district.
However, other market watchers suggest that Geylang has become more gentrified over the years. Moreover, CBRE's Mr Sim pointed out that no 99-year private housing sites have been sold by the government in the Aljunied MRT Station neighbourhood since 2000.
The reserve list site triggered is also just one stop from the Paya Lebar sub-regional centre, he added.
Some consultants note that a wave of small, freehold projects, many of them with shoebox units, will be completed in coming years in the Geylang area, pointing to a potential supply overhang.
The Geylang East Avenue 1 site can yield a maximum 249 residential units based on an average unit size of 70 square metres gross floor area for non-landed private housing projects outside the Central Area under a guideline from the Urban Redevelopment Authority that took effect on Nov 4, 2012.
Reply With Quote
Originally Posted by reporter2
