Wednesday, September 10, 2008

Choice Tanah Merah Condo Site Receives Seven Bids

Source : The Business Times, September 10, 2008

DESPITE the quieter property market and a weak response at some state land sales, a 99-year leasehold condo site next to Tanah Merah MRT station yesterday drew seven bids.

The top bid of $84 million or $282 per sq ft per plot ratio (psf ppr) came from TID - a joint venture between Singapore's Hong Leong Group and Japan's Mitsui Fudosan.

The top bid was within the $250-300 psf ppr range predicted for the plot when it was launched by the Urban Redevelopment Authority in mid-July.

But it is 11 per cent shy of the $318.50 achieved for a neighbouring site - farther from the MRT station - in April 2006, when sentiment was more buoyant. That site is now being developed as the Casa Merah condo.

Commenting on the response at yesterday's tender, an observer said: 'The market is not dead. If a prime site comes along there will be takers, especially at state land tenders.'

Agreeing, DTZ senior director (research) Chua Chor Hoon said: 'I'm not surprised with the outcome of the tender. After all, it was for a mass-market site in an attractive location where there has always been good demand for condos.' TID's bid was 12 per cent above the next highest offer by Sim Lian Land of $75 million or nearly $252 psf ppr. The other bidders were:

# Midview group unit Boon Keng Development ($61.88 million);

# BS Capital subsidiary Bishopsgate Developments ($61.33 million);

# Frasers Centrepoint unit FCL Emerald (3), which bid $53.58 million;

# Hoi Hup Realty ($48.51 million); and

# GuocoLand subsidiary First Changi Development ($44.63 million)

CB Richard Ellis director Leonard Tay estimates that based on TID's bid price, the breakeven cost for a new condo is likely to be $700-750 psf, translating to possible sale prices ranging from $800-850 psf.

'This takes into account recent comparables, the current market, much higher construction costs and the new planning guidelines on bay windows and planter boxes,' he said.

'Waterfront Waves, a new condo at Bedok Reservoir, is currently being marketed at $800 psf on average. A sub-sale unit at Casa Merah, was sold at $783 psf in August, while in the resale market, older units in East Meadows were transacted at an average of $660 psf in the first half of 2008.'

The 106,299 sq ft plot on offer at yesterday's tender has a 2.8 plot ratio - ratio of maximum potential gross floor area to land area - and can be developed into a condo with 240-250 units averaging 1,200 sq ft.

CBRE's Mr Tay said the future project on the site will be attractive to HDB upgraders living in Bedok, Tampines and Marine Parade and private homeowners in the East Coast area.

'It will also be attractive to expats looking to rent homes along major transport nodes,' he added.

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