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China's Nanshan pips 17 other bidders for Bishan housing site

It bids S$173.6m, or S$731 psf ppr, for the Lorong Puntong plot released by URA

By Lynette Khoo

[email protected]@LynetteKhooBT


CHINESE conglomerate Nanshan Group has topped the bids for a site off Sin Ming Avenue released by the Urban Redevelopment Authority (URA), potentially marking its first foray into the residential market here.

Nanshan's bid of S$173.57 million for the site in Lorong Puntong beat a field of 17 other bidders that included a mix of local and foreign developers.

Working out to S$731 per square foot per plot ratio (psf ppr), the bid is also higher than the $720 psf ppr that UOL and Singapore Land paid for the nearby Thomson Three site in August 2012.

While the popularity of the Bishan site was highly expected, what was least expected was the 7.2 per cent margin between Nanshan's bid and the next highest bid from Sustained Land's SL Capital Ventures Pte Ltd.

It would seem that Nanshan had decided to table a more aggressive bid this time, having missed out by a narrow margin in the past four tenders it had participated in lately, said Nicholas Mak, executive director at SLP International.

He noted developers that had bid for this site likely took reference from the Thomson Three site as well as the site along Ang Mo Kio Avenue 2, where Wheelock paid S$550 million (S$789.9 psf ppr) in 2012 and is now building The Panorama on the site.

CBRE head of research Desmond Sim noted that the relatively small plot size and the smaller quantum of below S$200 million "presents a good opportunity for a new player to put in a competitive bid to enter the market".

The 99-year-leasehold Bishan site covers an area of 10,502.8 square metres with a maximum permissible gross floor area (GFA) of 22,056 square metres. Some 280 homes can be built on the site.

Competition for this site was much more intense than for the Thomson Three site that saw only six parties vying for it, observed Ong Teck Hui, national director for research and consultancy at JLL.

"This tender also tells us that while the residential market is slowing and recent tenders are seeing less bidders and more cautious bidding, developers are still keen on attractive sites and would try to secure them," he said.

The site's location in a mature private housing estate and its proximity to Ai Tong School and the upcoming Bright Hill MRT Station along the Thomson Line are major draws, consultants note.

In addition, nearby condo projects have done well. The 445-unit Thomson Three has been 93 per cent sold at a median price of $1,403 psf, said ERA key executive officer Eugene Lim.

Other players that took part in the Bishan site tender included Allgreen Properties, City Developments in partnership with Hong Leong Group, as well as MCL Land.

Malaysia's Sunway Developments also threw in a S$143.2 million bid with Hoi Hup Realty and Oriental Worldwide Investments Inc.

This site also attracted two other Chinese players - Bo An Investments, which is controlled by Wang Mingsong, said to hail from China; and Cheung Kong Holdings' Best Desire Investments.

Based on the land price of S$731.11 psf ppr, the estimated breakeven price for the condominium project to be developed on this site could range from S$1,240 psf to S$1,310 psf, Mr Mak said.

Nanshan had in September agreed to acquire the former Midlink Plaza site on Middle Road from Lian Beng Group and the latter's joint-venture partner for S$270 million. The site is being redeveloped into a 396-room boutique hotel, with some strata retail space.

It is also understood to be the Chinese party that acquired the Park Regis Singapore hotel along New Market Street/Merchant Road last year for around S$250 million.