With a highest price of S$768 per square foot for the Tampines property, Sim Lian establishes a new record for EC land

The developer's S$465 million proposal for the sale of executive condo site outbids four other parties.

October 24, 2024

CONDOsingapore.com



Developer interest in an executive condominium (EC) property on Tampines Street 95 was high, and the highest bidder, Sim Lian, broke the previous record for EC land with an offer of S$768 per square foot per plot ratio (psf ppr).

Five offers were received for the Housing and Development Board (HDB) procurement, which ended on Thursday, October 24. It was anticipated by market observers that offers would range from S$650 to S$730 per square foot.

According to Nicholas Mak, chief research officer of Mogul.sg, the recent result demonstrated that developers saw EC projects as "a sure thing" in an unpredictable market, even if the strong showing did not come as a huge surprise to market analysts.

"EC sites generally translate to lower risks for developers due to the lower development cost and higher demand from buyers who are drawn in by the affordable prices, relative to those of new private home launches," said Eugene Lim, the main executive officer of ERA Singapore.

The second highest offer, S$756 psf ppr (S$457.5 million), from a partnership that included Santarli Construction, Apex Asia, construction business Kay Lim Realty, and Heeton Holdings, was 1.6% lower than Sim Lian's S$465 million offering at S$768 psf ppr.

Chinese developer CSC Land made an offer of S$438.8 million, or S$725 psf ppr, after Sing Holdings followed with a proposal of S$439.6 million, or S$726 psf ppr. At S$425.7 million, or S$703 psf ppr, Hong Leong Holdings' Intrepid Investments and TID Residential made the lowest offer.

It would be the developer's third EC project in Tampines if Sim Lian were to win this tender for the Tampines Street 95 property, which is expected to happen.

It is now constructing the 760-unit Aurelle of Tampines, which is expected to be on sale in the first half of 2025, on an EC site it purchased on Tampines Street 62 in October.

The Tampines Trilliant at Tampines Central, which was finished in 2015, was likewise designed by Sim Lian. (Sim Lian has also completed EC projects in Anchorvale and Choa Chu Kang.)

Sim Lian's "bolder bid" to acquire the site was characterised by PropNex head of research and content Wong Siew Ying as a calculated attempt to protect the company's market position.

The developer is able to set prices for their two EC projects without worrying about being undercut by other developers because to this land bidding process, which also lessens competition for Sim Lian in the Tampines region, said Mak of Mogul.

For the next two to three years, he said, "it can effectively corner the EC market in Tampines, increasing its influence and profitability before the government sells another EC site in Tampines."



Cost

Analysts estimated that the most recent EC project in Tampines might cost between S$1,500 and S$1,750 per square foot, with the highest offer of S$768 per square foot.

"This project will only be launched sometime in 2026, given the 15-month waiting period from the time of land acquisition to the launch of the EC," said Justin Quek, CEO of OrangeTee & Tie.

"The time between launches may help to ensure sufficient demand because there won't be too much competing demand to divert buyers' attention," he said.

The winning offer in the last EC procurement was 5.1% lower than Sim Lian's S$768 psf ppr bid. A joint venture between ZACD, China Communications Construction Company, and CNQC International (parent company of Qingjian Realty) was given a site at Jalan Loyang Besar in Pasir Ris in August for S$557 million, or S$729 psf ppr.

According to Lim of ERA, developers may have felt more confident because to lower financing costs brought on by recent interest rate reductions.

Over the last several auctions, EC land rates have been gradually increasing. Sim Lian paid S$721 psf ppr for the Tampines Street 62 property in October, which was slightly less than Qingjian's August offer of S$729 psf ppr for the Jalan Loyang Besar site.

PropNex's Wong said that ECs that are more reasonably priced, with a median price of S$1,500 psf, would continue to be attractive to qualified purchasers, given that the typical unit price of new mass market condominiums in the suburbs is S$2,145 psf so far this year.

Only 171 unsold new EC apartments were available on the market as of the end of September, according to URA's monthly sales statistics, with the majority of these units located in Yishun and Bukit Batok, she said.

The Tampines Street 95 site has a maximum gross floor space of 56,223 square metres and measures 22,488.9 square metres (sq m).

The project, which is close to the Tampines West MRT station, has the potential to build 560 dwelling units in total.

Additionally, there is a planned 23,510.7 sq m mixed-use development with up to 585 additional residential and business units close by.

Earlier this month, the Hoi Hup-Sunway corporation was granted the land for S$668.3 million, or S$1,004 psf ppr.

Tenet, which was co-developed by Qingjian Realty, Santarli, and Heeton, was the most recent EC project to be put up for sale in Tampines. The project, which was started in December 2022, is almost sold out; as of October, there is just one unit remaining.

Bukit Batok EC project

According to Wong, City Developments' Lumina Grand, another EC project in Bukit Batok, was advertised in January of this year and has sold 83% of its 512 apartments.

Novo Place in Tengah, which has the potential to produce 504 units, is probably going to be the next EC to be launched.

In February, the land was purchased by a joint venture between Hoi Hup Realty and Sunway Developments for S$423.2 million, or S$701 psf ppr.