A residential land site for condominium development at Upper Serangoon Road received just three bids at the close of its tender on Wednesday.
The top bid of S$270.3 million from Allgreen Properties is also below market expectations.
The 265,013 square feet site has a maximum gross floor area of 927,545 square feet.
Thus, the bid price by Allgreen works out to be a unit land price of S$291 per square foot per plot ratio (psf ppr).
This is lower than the S$300 psf ppr property consultants had earlier projected for the lower end bids in July.
The top end of the projected bids was expected to be around S$450 psf ppr.
The site was put up for sale by the Housing and Development Board (HDB) through the Government Land Sales (GLS) programme in July.
A consortium which included Far East Civil Engineering put in the second highest bid of S$252.8 million while CEL Development bid came in at S$242 million.
Chia Siew Chuin, director of research & advisory at Colliers International, said that the top bid of S$291 psf ppr is the lowest unit land price recorded since August 2009 – when the private residential property market was just in the nascent phase of recovery after hitting the trough.
It is also about 9.1 per cent lower than the S$320 psf ppr achieved for a non-landed residential plot located nearby at Serangoon View when it was sold to a consortium including Frasers Centrepoint, Far East Civil Engineering and Sekisui House in November 2010.
Ms Chia said that the low bids “reinforce developers’ increasingly cautious market outlook amid heightened market uncertainties”.
“The close succession of tender closings for the subject site and a similar plot at Punggol Way/Punggol Field could have contributed to the tepid response to the subject site,” she added.
Nicholas Mak, executive director for research and consultancy at SLP International Property Consultants, said the low number of bids received could be because some developers may consider this site less attractive than some of the other land parcels on the GLS Confirmed List for the second half of 2011.
“They could be saving their resources for the other site tenders which will be launched soon,” he added.
He said the lower tender price may not necessarily lead to lower home prices because Allgreen Properties would likely sell the condominium to be developed on this site at the going market price at the time of its launch.
Based on Wednesday’s tender, the winning bid will translate to an approximate breakeven price of between S$630 and S$660 psf.
Source : Channel NewsAsia – 7 Sep 2011