http://www.businesstimes.com.sg/arch...-site-20131211

Published December 11, 2013

Far East strengthens hold in Gambas with bid for third site

Its winning bid yesterday was, however, lower than price it paid for two earlier parcels

By Kalpana Rashiwala [email protected]


PROPERTY giant Far East Organization has strengthened its presence in Gambas Avenue in the Woodlands/Sembawang area, after emerging as top bidder for the third plot of land along the road at a state tender yesterday.

Reflecting an averaging-down strategy, the group's unit Grow-Tech Properties' bid yesterday at $102.20 psf ppr was, however, significantly lower than the $137.90 psf ppr it paid for Parcel 1 and $127.19 psf ppr for Parcel 2 at an Urban Redevelopment Authority tender in October.

With Parcels 2 and 3 beside each other, market watchers expect the group to amalgamate them and do a combined project. Far East is reviewing the entire plan for the three sites, which is expected to include a range of industrial product types - such as ramp-up, flatted and terrace factories - for sale and lease.

"It wouldn't be surprising if Parcel 4, which is on the reserve list, is triggered for launch," said Tan Boon Leong, executive director (industrial services) at Colliers International.

All four plots have 30-year leasehold tenure and are zoned for Business 1 use with 2.5 plot ratio.

Yesterday's tender drew four bids, compared with six and nine for Parcels 1 and 2. "Some potential bidders may have been deterred from taking part in the latest tender, knowing that Far East has a stronghold in the location," said Mr Tan.

SLP International executive director Nicholas Mak said Far East's weighted average land price for Parcels 2 and 3 is $114.35 psf ppr. Colliers' Mr Tan estimates their break-even cost at $250-280 psf.

R'ST Research director Ong Kah Seng said bidders view the Gambas area as a more affordable industrial location compared with the more established Woodlands/Admiralty industrial belt. Mr Mak noted that Parcel 3 is well connected through dual frontage along Gambas Crescent and Gambas Avenue. "Gambas Avenue will also be connected to the future North-South Expressway, which would enhance the accessibility of the industrial space located in this area," he added.

Far East's top bid yesterday was 21 per cent above the next highest offer of $84.45 psf ppr by First Shine Management Services, a fully owned unit of mainboard-listed Hock Lian Seng Holdings, which is involved in civil engineering, property development and investment.

The winning margin is much smaller than the 48.5 per cent and 54.4 per cent for Parcels 1 and 2 in October. However, the second-highest bid yesterday was not far off the respective second-highest bids of $92.85 psf ppr and $82.36 psf ppr respectively for the earlier two plots.

Besides the Far East and Hock Lian Seng units, the other two bidders at yesterday's tender were Eco-I (believed to be linked to Jian Huang Construction), and Soilbuild Group Holdings. They bid $77.43 psf ppr and $45 psf ppr respectively.