KepLand, Wing Tai tie-up top bidder for Serangoon North site.
Keppel Land (KepLand) and Wing Tai teamed up to place the top bid at a state tender on Thursday for a 99-year-leasehold private housing site along Serangoon North Avenue 1.
Their S$446.28 million bid, which translates to S$964.81 per square foot per plot ratio (psf ppr), was 6.6 per cent higher than the second highest offer of S$418.7 million (S$905.19 psf ppr) from Frasers Centrepoint's FCL Residences.
It was also nearly 16 per cent higher than the S$835 psf ppr that an Oxley Holdings-led consortium is paying for the nearby 2.76-ha Serangoon Ville collective sale site.
This unit land price is based on the S$499 million purchase price for Serangoon Ville announced on Wednesday and an estimated S$195 million that the consortium will have to pay to the state to top up the site's lease to 99 years and for the rights to redevelop the site, to 2.8 gross plot ratio.
The Oxley-led consortium was the seventh highest bidder at Thursday's tender by the Urban Redevelopment Authority (URA) for the 1.72-ha Serangoon North Avenue 1 site. It bid nearly S$393.18 million or about S$850 psf ppr.
A Singapore Land-UOL tie-up was in third place at S$901.94 psf ppr. City Developments was fourth, at S$901.27 psf ppr. The second to fourth highest bids were within a 0.4 per cent margin, reflecting the tight competition. In all, the tender drew 16 bids, a testament to developers' prevailing strong appetite for land.
A KepLand spokesman, when asked about the group's bid price, said: "We believe we have put in a commercially viable bid, befitting the site's good location and strong attributes, and having taken into consideration the market conditions."
KepLand and Wing Tai plan to develop over 600 homes on the site.
"We are confident that this new development will see positive demand as there have been few new condominiums launched in recent times in the popular Serangoon Garden area," said KepLand chief executive Ang Wee Gee.
KepLand and Wing Tai also teamed up to bid for URA's tender for the Woodleigh Lane private residential site which closed earlier this month. There they were in second position, pipped by a joint-venture between Chip Eng Seng, Heeton Holdings and KSH by a narrow margin of just 0.8 per cent.
As for Thursday's tender for the Serangoon North Ave 1 site, analysts termed the top bid as aggressive. The developers of this project would need to launch the residential units at above S$1,600 psf, which is significantly higher than the recent private condo launches in the vicinity.
This shows an expectation of the market to be on the recovery path. Analysts were not surprised by the top bid. After the recent Stirling Road and Woodleigh Lane tenders which both fetched more than S$1,000 psf ppr, optimistic bids seem to be the market norm.
The strong turnout of 16 bidders could be an indication that developers have accepted that the trough of the market is here.
Last October, City Developments, Hong Leong Holdings and TID launched the Forest Woods condo, which is much closer to Serangoon MRT Station and nex mall compared to the latest site, at an average price of S$1,400 psf. They sold nearly two-thirds of the project, or 337 of its 519 units, on the first weekend.
While Forest Woods is nearer Serangoon MRT Station, in terms of residential character the Serangoon North Avenue 1 site is in a better vicinity, being next to Kensington Park Condo, which enjoys good demand in the secondary market, and near the established Serangoon Gardens landed housing estate and its conveniences such as Chomp Chomp Food Centre.
Analysts also point to the site's proximity to educational institutions - including Rosyth School, Zhonghua Primary and Lycee Francais De Singapour (French International School).
Last weekend's sellout of the Hundred Palms Residences executive condo a short distance away may also have boosted developers' confidence in bidding for the URA site.
Other bidders at Thursday's tender included China Construction (about S$869 psf ppr), GuocoLand (S$850 psf ppr), a Hoi Hup-Sunway tie-up (S$825 psf ppr), OUE in partnership with Qingjian Realty (S$819 psf ppr), Allgreen Properties (S$780.46 psf ppr) and Kingsford (S$780.44 psf ppr). Chip Eng Seng teamed up with Roxy-Pacific for a S$773 psf ppr bid while Sing Holdings partnered Wee Hur (S$772 psf ppr). Greatview offered S$765 psf ppr for the site and Sim Lian Land, S$746 psf ppr.
EL Development was the lowest bidder, at S$730.72 psf ppr.
Market watchers noted that the URA site garnered more interest - 16 bids - versus only five for the Serangoon Ville collective-sale tender and a much higher unit land price. That may partly have to do with the bigger total investment quantum to be expected for the Serangoon Ville site.
It has a much bigger land area and a slightly higher plot ratio, translating to a bigger gross floor area of 831,349 square feet - compared with 462,557 square feet for the URA site. With a bigger deal size, the risks are higher.
Moreover, the turnaround for a development on the URA site will be quicker vis-a-vis Serangoon Ville, which being a collective sale will be subject to mediation/court approval and other processes.
Adapted from: The Business Times, 28 July 2017