Bids For Woodleigh Condo Site Lower Than Estimates

Source : The Business Times, June 25, 2008

Top bid from Frasers Centrepoint is $270 per sq ft per plot ratio

THE tender for a residential site at Woodleigh Close has closed, with the Urban Redevelopment Authority (URA) receiving a top bid of $270 per sq ft per plot ratio (psf ppr).

The 1.08 ha site near Potong Pasir MRT station was launched in April. Earlier estimates by property consultants had put the range of bids at $300-$380 psf ppr.

The top bid of $270 psf ppr or $87.7 million came from Frasers Centrepoint and is just 6 per cent higher than the second highest bid of $255 psf ppr from Hoi Hup Realty.

The lowest bid of $227 psf ppr was from Sim Lian Land and is about 16 per cent lower than Frasers Centrepoint's bid.

Asked if the site will be awarded despite the bids being low, Cushman and Wakefield managing director Donald Han said: 'Based on the today's market, and the fact that the bids were all quite close, I believe the site will be awarded.'

Mr Han said he does not think the bids were opportunistic. 'A developer would have to consider that the market could remain challenging. New projects may not sell as quickly and construction costs have gone up.'

But he believes that 'at the end of the day, there is still money to be made'.

The tender also drew bids from Hong Leong Group, GuocoLand and Hiap Hoe.

Giving a glimpse of developer sentiment, Frasers Centrepoint CEO Lim Ee Seng said: 'If a site is good, there will always be bidders.'

And Mr Lim for one believes that potential over-supply has been addressed by the latest Government Land Sales Programme. 'Most of the sites are on the reserve list,' he said.

In July 2007, Frasers Centrepoint clinched a nearby site at Woodsville Close for $434 psf ppr.

Li Hiaw Ho, executive director at CBRE Research, said that based on the top bid of $270 psf ppr, the estimated breakeven cost of a new project on the Woodleigh Close site will be $650-$700 psf.

He pointed out that in January-June, resale units in the freehold Blossoms changed hands at an average price of $840 psf, while units in Casa Meya, a new freehold project in Potong Pasir estate, were sold for around $910 psf. 'Therefore, it is likely that a new 99-year leasehold project in this location may be able to fetch $800-$850 psf,' he said.

Chesterton International's head of research and consultancy Colin Tan said the bids 'reflect that developers are looking at demand from owner occupiers and genuine buyers' and will have to keep prices 'affordable' accordingly.

Mr Tan also believes that developers are keenly aware of the need to keep 'revenue flows going', in light of lower sales in the current market, 'to pay salaries of their staff in the marketing department'.

Separately, the URA has made residential sites at Sembawang Road/ Canberra Drive and Sengkang West Avenue/Fernvale Link available on the reserve list.

The 25,825 sq m Sembawang Road/Canberra Drive site can be developed into strata landed housing, a condominium or flats, while the 17,000 sq m Sengkang West Avenue/Fernvale Link site is for a condominium.