Property developers to be more selective in bids for govt land, say analysts

Property developers may be less aggressive in their bids for government land in the second half of this year. This is according to analysts, who have said that most developers will be more selective in their choices as well.

Developers may only have eyes for sites which are the most profitable in the government land sales programme, such as those at Alexandra Road and Bishan Street 14, which analysts said are the most attractive.

One of the sites on the government land sales (GLS) programme for the second half of this year is the land parcel at Alexandra Road. With a gross plot ratio of 4.9 yielding 524,300 square feet of gross floor area, the land’s minimum price is estimated at S$420 million to S$445.7 million or S$800 to S$850 per square foot, and is slated for sale in October.

It is on the confirmed list of the GLS programme for the second half of this year and it can yield an estimated 545 residential units.

Located within a short walk from Redhill MRT station, analysts said it is likely to be one of the most hotly contested sites in the GLS programme.

Nicholas Mak, Executive Director of Research and Consultancy at SLP International, said: “Because of the high price that this sites could attract, it may only appeal to some of the bigger developers, and even the mid-sized ones will join forces as a consortium to go in. Some of the newer condominiums around the Redhill MRT station could be transacting at prices of S$1,300 to S$1,400 per square foot, especially for the smaller ones.”

Ascentia Sky, the property adjacent to the land parcel, is selling at S$1,422 per square foot and 299 out of the 373 units have been sold.

While there are risks of oversupply going forward, analysts said the GLS programme can be adjusted according to future demand.

But for now, demand is robust, especially for residential sites near MRT stations. For example, the Bishan Street 14 site, which will be up for sale by September if its minimum price is met by bidders.

Analysts said it will be no surprise if CapitaLand bids for the site.

Dr Chua Yang Liang, Head of Research (Southeast Asia) with Jones Lang LaSalle, said: “We have good location, good amenities in there, good shopping areas, good schools in the neighbourhood and there will be a lot of interest by the end consumer.

“So developers would be watching closely…we won’t dismiss the possibilty of CapitaLand again. Looking very closely, I believe since they have won the adjacent area, they may be looking at this as well to create a more continuous development.”

CapitaLand won the adjacent Bishan Street 14 site in February with a top price of S$550.1 million, beating the next highest bidder, Keppel Land, by 27 per cent.

Analysts said GLS sites at Punggol Central and Bartley Road are also attractive as they are located within walking distance to MRT stations. With these choice locations, properties in such areas will be a hit with families and HDB upgraders.

Source : Channel NewsAsia – 10 Jun 2011

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