A state tender for a commercial and residential site next to Potong Pasir MRT Station has surprised the market with a whopping 15 bids, with strong participation from the China contingent.
The top four bids were cast by China/Hong Kong players (including one who teamed up with a Singapore developer). The China players generally have a more optimistic view of the Singapore property market compared with Singapore developers.
Local players, on the other hand, generally cast more measured bids. City Developments was the the fifth highest bidder yesterday at S$716 per square foot per plot ratio (psf ppr) – much lower than the S$793 psf ppr it paid back in September 2012 for the nearby Tai Thong Crescent site, which is zoned for residential use with commercial space on the first storey and now being developed into The Venue Residences and Shoppes.
The latest site, at Meyappa Chettiar Road, is considered to be choicer as it is right next to the MRT station and has a bigger commercial component.
“It’s like the top four bidders don’t see any softening in the market,” said a market watcher.
Top bidder MCC Land’s bid of S$471.62 million translates to a unit land price of S$775.17 psf ppr.
The market watcher said: “They’re probably looking to sell the residential units at an average price of above S$1,400 psf and retail units at around S$4,000-5,000 psf.”
MCC’s bid was just 2.4 per cent above the second highest bid of S$756.73 psf ppr by Best Desire Investments, understood to be controlled by Li Ka-shing’s Cheung Kong Holdings. Bo An Investments – controlled by Wang Mingsong, a Singapore permanent resident said to hail from China – teamed up with local player Santarli to place the third-highest bid of nearly S$751 psf ppr. Santarli is developing the Sant Ritz condo diagonally opposite the site.
In fourth position was a Singapore unit of China’s Nanshan Group. The Longkou City, Shandong-based group is involved in a range of fields, such as finance, high-tech industries, property and education.
Greenland Group, a state-owned mega enterprise group in Shanghai, partnered Singapore group Amara Holdings’ unit TTH Development to make an offer of nearly S$699 psf ppr.
MCC, a unit of state-owned Metallurgical Corporation of China or MCC Group, said that it plans about 700 homes and 60 retail units in a “signature landmark” project in Potong Pasir. It expects to launch the development in the second quarter of next year. This will mark its first mixed-use property development in Singapore. Its earlier projects are purely residential.
The lowest bid, from Tennessee Investments, said to be a joint venture between BBR Holdings and SP Tao’s Shing Kwan, was S$401 psf ppr.
The 1.6 hectare land parcel can be developed into a 13-16-storey project with a a maximum gross floor area (GFA) of 56,523 square metres (608,408 sq ft). Of this, a maximum 5,000 sq m – or 8.8 per cent of the total GFA – can be for commercial use. This includes a 500 sq m cap for restaurant use – due to traffic congestion issues.
The project’s residential component can generate an estimated 685 homes. “Since 91 per cent of the GFA will be developed into residential use, the development cost will be mostly influenced by the residential space,” said Nicholas Mak, SLP International executive director. CBRE’s Singapore research head Desmond Sim said that the number of bidders “proved that developers still need to replenish their landbanks to ensure that the core business is sustainable”.
Contrasting the strong turnout at yesterday’s tender with the dismal showing of just three and four bids each for a pair of private housing sites in Fernvale Road in Sengkang earlier this month, an analyst said: “Developers are selective, making a beeline for attractive sites close to town, especially if there is an added sweetener in the form of a commercial component, while eschewing plain-vanilla, suburban housing sites, especially in saturated locations like Sengkang.”
Source: The Straits Times