Top bid for GLS site with new building rules beats expectations Asset Legend, believed to be a unit of Li Ka-shings Cheung Kong Holdings, has put in the highest tender price for the first government land sales site that comes with new buildability and productivity regulations. According to the Urban Redevelopment Authoritys tender results on Thursday, it offered S$276.8 million, or S$848.84 per square foot per plot ratio (psf ppr), for the 99-year leasehold mixed-use site at Upper Serangoon Road. This is higher than consultants expectations of S$670-750 psf ppr. It is considered aggressive by analysts, who had expected more caution due to the new prefabrication requirements, which is likely to lead to marginally higher construction costs. The top bid is 15 per cent more than the next highest bid of S$240 million (S$736.06 psf ppr), put in by Sustained Lands SL Capital Ventures Pte Ltd. The winning margin is rather surprising, especially in light of the current market sentiment, said one analyst. In our opinion, the second bid price is more in line with current market expectations. A consortium comprising City Developments unit Verwood Holdings, Hong Leong Groups Intrepid Investments, and TID Residential put in the third-highest bid of S$234.6 million (S$719.50 psf ppr). The tender attracted 11 bids in all, within consultants expectations. The lowest bid of S$172.7 million (S$529.66 psf ppr) came from Koh Brothers unit KBD Ventures. Consultants say that the top bid translates to a breakeven price of at least S$1,300 for the residential units. The site is primarily residential, with its first storey allocated for commercial activity. Conveniently located near Kovan MRT station, it is expected to yield about 340 housing units. As (the new requirements are) a new move, the economies of scale have yet to be tested and the breakeven price for this project could be higher as it is the first adopter, said Eugene Lim, the key executive officer of ERA Realty Network. Asset Legend could be bullish about the sites prospects due to its proximity to the Kovan MRT station and its main road frontage, which works well for the first-floor commercial units. Another analyst said that optimistic bids are often common with foreign developers, who might be willing to assume a lower profit margin because they see the benefits of developing a choice site which can possibly yield an end-product with greater investment potential. Earlier this month, the Building and Construction Authority announced that from November, projects built on government land sales sites would have to meet higher building design and constructability standards, as well as a certain level of prefabrication. The projects tender closing date was thus extended from Nov 13 to Nov 27 to give prospective tenderers more time to factor in the new requirements into their bids. Adapted from: The Business Times, 28 Nov 2014
Posted on: Fri, 28 Nov 2014 09:32:54 +0000
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