Cheung Kong Pips Far East In URA Tender

Source : The Business Times, March 20, 2008

It offers $305psf ppr for West Coast condo plot next to Blue Horizon.

Cheung Kong Holdings-linked Billion Rise yesterday pipped Far East Organization to emerge as top bidder for a 99-year leasehold condo site facing West Coast Park and overlooking the sea.

Billion Rise’s bid of $110.44 million or $305 per square foot per plot ratio (psf ppr) was just 1.4 per cent higher than the next highest offer of $301 psf ppr by Far East unit Tian Hock Properties .

The tender for the choice plot, next to Blue Horizon condo developed by Far East, attracted 12 bids. City Developments and TID, Allgreen Properties , Frasers Centrepoint, MCL Land, Sim Lian, a Kheng Leong unit and Hoi Hup Realty were among the other bidders. Entities linked to Alpha Investment Partners and Teambuild Construction also took part in the tender.

Yesterday’s outcome was in a sharp contrast to that at a state tender last week for a landed housing plot at Jurong West when there were just two bids - both way below market expectations. The Housing & Development Board, which conducted that tender, decided not to award the site.

On offer at yesterday’s tender, conducted by Urban Redevelopment Authority, was a more appealing site near the sea and a short drive from the VivoCity shopping and entertainment complex.

‘The plot attracted an overwhelming response of 12 bids from major and mid-size developers and contractors,’ said CB Richard Ellis executive director Li Hiaw Ho. ‘It signals developers’ confidence in the suburban segment despite the current lukewarm response to new projects.’

Notwithstanding the wide participation in yesterday’s tender, the top bid of $305 psf ppr was towards the lower end of the $260-400 psf ppr range of bids indicated by property consultants when the site was launched in January.

Industry sources suggested that Cheung Kong’s breakeven cost for the condo could be about $600-630 psf. ‘It is likely that units in the proposed development will be sold at an average price of around $750-800 psf,’ said Knight Frank director Nicholas Mak.

Units at Blue Horizon next door were transacted at an average price of $740 psf in Q4 last year.

Market watchers had expected Cheung Kong, controlled by Hong Kong tycoon Li Ka-shing, to be awarded the latest site. The last time that a company in Mr Li’s stable was awarded a 99-year condo site in a state tender here was 11 years ago in early 1997, when Japura Pte Ltd placed the top bid of $456.51 psf ppr for a site in Bayshore Road, which it later developed into the Costa Del Sol condo that boasted sweeping views of Singapore’s eastern shoreline.

Costa Del Sol is in front of The Bayshore condo, which was developed by Far East. This time, the heavyweights took the competition to the West Coast.