THE latest batched government tender closings of three 99-year leasehold residential sites on Wednesday saw developers flocking to the sites at Cuscaden Road and Mattar Road, and setting a new high in land rate for the prime Cuscaden Road site.
But the large site in Silat Avenue pulled in only one developer.
For the Cuscaden Road site within the prime Orchard Road district, the top bid from SC Global Developments, New World Development and Far East Consortium International was S$410 million.
This translates to S$$2,377 per square foot per plot ratio (psf ppr), trumping eight other bidders for the site.
The sum not only smashes the record for a residential government land sale (GLS) site, it also surpasses earlier market expectations of between S$1,800 and S$2,300 psf ppr, said Tricia Song, head of research for Singapore at Colliers International.
The S$$2,377 exceeds the previous GLS record set by Frasers Property for Jiak Kim Street site's S$1,733 psf ppr by 37 per cent.
Explaining his optimism, SC Global Developments chairman and chief executive Simon Cheong noted that it is has been more than a decade since a residential GLS site became available for sale along Orchard Road.
"Surrounded by Singapore's finest hotels with The Regent Hotel in front, St Regis around the corner and Four Seasons to the side, this highly sought-after address presents a wonderful opportunity to create a distinctive new collectible," he said.
Based on the land price, consultants are expecting a breakeven price of between S$3,100 and S$3,300 psf, with the selling price for the new project to be between S$3,300 and S$3,700 psf.
Ms Song noted that her forecast range of S$3,500 to S$3,700 psf is achievable, given that nearby freehold luxury new launches such New Futura and Ardmore Le Nouvel have achieved average prices of S$3,200 to S$4,000 psf; the 99-year leasehold Wallich Residence in Tanjong Pagar has sold some units at S$3,700 psf.
ZACD executive director Nicholas Mak said that the fact that all nine bids for the Cuscaden Road site are above S$2,000 psf ppr "will give a shot in the arm for the land-sale market, especially the en bloc sale market".
Over at the Mattar Road site, there were 10 hotly contested bids.
The top bid of S$223 million or S$$1,109 psf ppr came from FSKH Development Pte Ltd, a consortium of Hock Lian Seng Holdings, Keong Hong Holdings and TA Corporation.
Huttons Asia research head Lee Sze Teck noted that the bids of the top five bidders varied by only 5 per cent, and that the fierce competition stemmed from there being limited residential land available beside Mattar MRT station and within proximity of the commercial cluster at Paya Lebar.
"The successful bidder can ride on the remaking of Kampong Bugis which the government recently announced; a master developer is likely to be appointed in the next one to two years," he said.
Mr Mak estimated the breakeven price for the Mattar Road site to be between S$1,700 and S$1,800 psf.
JLL national director of research and consultancy Ong Teck Hui suggested that the keen bidding for the Cuscaden Road and Mattar Road land parcels pointed to demand for attractive residential sites being still buoyant.
"With such keen demand for sites, the en bloc market is likely to stay firm as it continues to be the main source of residential land supply over GLS," he added.
The lone bid for the land parcel in Silat Avenue in Kampong Bahru came UOL, UIC and Kheng Leong Company, at S$1.04 billion or S$1,138 psf ppr.
Mr Ong said the muted demand could be due to the large capital outlay and constraints posed by the presence of five conserved buildings, which are to be retained and restored.
Another condition is that the number of dwelling units on the site is capped at 1,125 units.
There is a cap on commercial gross floor area at 1,300 sq m (13,993 sq ft) as well.
The tender condition for the Silat Avenue site also requires the use of prefabricated, pre-finished volumetric construction (PPVC), which could have put developers off.
But this complexity has not deterred UOL, which is already developing a 40-storey condominium in Clementi called The Clement Canopy using this method of construction.
UOL deputy group CEO Liam Wee Sin said the consortium was drawn to the inner-city location and low supply in the vicinity of the Silat Avenue site, which would be a draw for investors looking for an inner-city location to live in or for rental income.
"Our proposed development will likely comprise two 56-storey residential towers and five conserved buildings, which we will convert into one-bedroom apartments and common facilities," he added.
Adapted from The Business Times, 27 Apr 2018.