http://www.straitstimes.com/archive/...-land-20141220

Foreign firms not solely to blame for pricey land

Most bullish bids at govt land sales tenders made by local developers

Published on Dec 20, 2014 12:42 AM

By Rennie Whang


THE growing participation by foreign developers in land tenders here in recent years has sparked worries that they have been crowding out local developers.

But while they are seen to be aggressive in bidding for land, they cannot be solely blamed for pushing up land prices, experts say.

Foreign developers and their joint venture partners won 32.3 per cent of residential Government Land Sales (GLS) tenders from 2011 to November this year, excluding executive condominium (EC) sites, said SLP International executive director Nicholas Mak.

But while some foreign developers submitted bullish bids - defined as top GLS bids over 10 per cent higher than the second highest bid - they made up only 27.8 per cent of the total number of bullish bids in the same period.

"The majority of bullish bids were still submitted by Singaporean developers," said Mr Mak.

With rising uncertainty in the residential market, foreign developer participation in residential tenders has also fallen, he said.

The average number of foreign bids per private residential land tender fell from 3.1 last year to one this year, the lowest since 2010. At GLS tenders for EC sites, the average number of foreign bids per tender fell from 2.3 last year to 1.6 this year.

But two foreign developers - China's MCC Land and Hong Kong's Asset Legend by Cheung Kong Holdings - submitted bullish top bids for two mixed-use sites this year, said Mr Mak.

While benchmark land prices may sometimes be set by foreign developers, they understand local buyers may not bite if launch prices are high, given their limited track record. Thus, they do not set benchmark project prices for the area, said R'ST Research director Ong Kah Seng.

For example, in 2012, Chinese-owned Kingsford Development raised eyebrows when its bid for a Hillview Avenue site was 18.6 per cent higher than the next.

But this was comparable to the land price of $673 psf ppr for nearby The Hillier offered in 2011.

Kingsford's Hillview Peak has been selling at an average price of $1,359 psf, just a touch higher than $1,326 at The Hillier.

Similarly, MCC Land won a Tampines Avenue 10 site last year with a bid 7.6 per cent higher than the next, and 34 per cent higher than for an adjacent site, Q Bay Residences, sold in 2012.

MCC Land's The Santorini has been selling at an average price of $1,119, marginally higher than $1,041 psf at Q Bay Residences.

The slight price difference could be due to the newer project benchmarking itself against the older launch, said Mr Ong.

In the EC market, foreign developers do not seem to have set benchmark prices, Mr Ong added.

Projects such as Sea Horizon in Pasir Ris by Hao Yuan Investment and Ecopolitan in Punggol by Qingjian Realty have sold at median prices of $811 psf and $795 psf respectively. "The $800 psf price was established in the second half of last year by both local and foreign developers, as the total debt servicing ratio seemingly shifted demand from private condominiums to ECs," said Mr Ong.

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