Wednesday, September 10, 2008

Tanah Merah Residential Site Attracts 7 Bids

Source : The Straits Times, Sep 10, 2008

A TENDER for a choice residential development site right next to Tanah Merah MRT station has attracted a healthy seven bids - proving that even in a subdued market, location is king.

TID placed the highest bid - $84 million, or $282 per sq ft (psf) of potential gross floor area, the Urban Redevelopment Authority said yesterday.

The firm is a partnership between the Hong Leong Group and Japan's leading real estate company Mitsui Fudosan,

Its bid is 12 per cent above the second highest bid - from Sim Lian Land - at $75 million or about $252 psf of potential gross floor area.

Boon Keng Development was third at $61.88 million or about $208 psf of potential gross floor area.

Other bids were much lower, with First Changi Development coming in last at $44.63 million.

The seven bids were a strong showing. 'It's a positive shot in the arm for the property market where sentiment is concerned,' said Knight Frank's head of research and consultancy Nicholas Mak.

He said the 99-year leasehold Tanah Merah Kechil Avenue site generated healthy interest as it is next to an MRT station.

'In light of the current cautious sentiment in the residential market, the amount of interest that this site has generated provides evidence that land parcels in good locations with immediate accessibility to transport links are still sought after by developers,' said CBRE Research director Leonard Tay.

TID's bid is lower than the $318.50 psf per plot ratio price achieved for the nearby Casa Merah site back in 2006.

Property consultants said the breakeven cost of a condo at the Tanah Merah site should be at $700 psf to $750 psf, based on the top bid. This means that TID, if awarded the site, would be able to sell condo units at between $800 psf and $850 psf, they say.

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