China Firm Puts In Top Bid For Bishan HDB Site

Source : The Business Times, February 20, 2008

Qingdao Construction offers $135.9 million for Design, Build and Sell Scheme plot

CHINA-BASED builder Qingdao Construction Group Corporation has put in the top bid of $135,888,777 or $237 per square per plot ratio (psf ppr) for a Housing and Development Board (HDB) Design, Build and Sell Scheme (DBSS) site in Bishan.

The tender for the site closed yesterday, and HDB is expected to award the site within two weeks. Qingdao, which has been in Singapore for nine years, is now the third China-based company to have ventured into property development here.

In December 2007, Ximeng Land paid $216 million or $1,350 psf ppr for a landed plot on Pearl Island at Sentosa Cove.

Earlier, in November, another unnamed Chinese developer together with a Singaporean partner was reported to have paid $61 million for 15 terrace houses in Balestier.

Zuo Hai Bin, general manager of Qingdao here, said that it had been planning to enter the property market and decided that the time was right with the Bishan DBSS site.

He said: 'The demand for HDB premier flats is high for the near future in Singapore. It is a good time to enter HDB property market.'

Mr Zuo said Qingdao's business activities in Singapore are financially backed by China Development Bank and the Export-Import Bank of China.

Savills Singapore director (marketing and business development) Ku Swee Yong also noted that the Chinese government is seen to be seeking more overseas investments. 'I expect to see more Chinese developers and construction firms looking for investment opportunities here,' he said.

Qingdao will build a 400-unit development and will release the launch prices and date of the launch later.

Demand for DBSS flats has been high. At the recent launch of City View @ Boon Keng in January, about 1,100 people applied for 714 units on the first day alone.

The developer, Hoi Hup Sunway Development, paid $233.74 psf ppr for its site in May 2007, and units were sold at an average of $520 psf.

Mr Ku estimates that at Qingdao's bid price of $237 psf ppr, the eventual launch price of the Bishan development could be around $550 psf. While rising construction costs are a concern of many developers, Mr Ku said that Qingdao, being a construction company, will probably benefit from 'rolling two profit margins into one'.

'Construction companies now have an edge over developers,' he added.

Indeed, the tender for the Bishan DBSS site attracted not one but three construction-based companies, with Sim Lian Land and Hoi Hup Realty/Sunway Concrete Product putting in bids of $202 and $179.20 psf ppr respectively.