Low Bids, So Landed Plot In Jurong Not Awarded

Source : The Straits Times, Mar 19, 2008

IN A keenly watched move, the Government has decided not to award a landed housing site in Jurong West after only two bids came in - both way below expectations.

The top bid for the site, from Boon Keng Development, came in at $11.8 million, or $78 per sq ft (psf) of land area - less than half of what one consultant had expected.

The only other bid for the site, in Westwood Avenue, came from Sunway Concrete Products, which offered even less at $10.33 million, or just $68.10 psf.

The tender for the 14,098.9 sq m, 99-year leasehold site closed a week ago.

Property market watchers had been waiting with interest to see how the Government would respond to such low bids, given the recent slump in market sentiment.

After the boom times seen last year, sale volumes have fallen significantly as buyers and sellers remain on the sidelines.

Cushman & Wakefield managing director Donald Han, who had tipped that the site could have fetched $200 psf, said the Government had been wise not to award the site.

‘If you award the site, there will be a downward adjustment of the valuation in the area,’ he said.

The price would also be used as a benchmark for future tenders of such sites in the area, consultants said.

Said Knight Frank director (research and consultancy) Nicholas Mak: ‘In a market with thin volume, tenders on the confirmed list could invite opportunistic bids.’

Sites on the Government’s confirmed list are put up for tender on a specific date.

The Government also sells reserve-list sites, which are put up for sale only when a developer commits to bid a minimum price.

‘There are buyers capitalising on the weak property market but there’re no fire sales yet,’ said Mr Han.

Earlier this year, the Government also chose not to award the tender for a transitional office site in Aljunied because the only bid it received was too low.

Mezzo Development had offered to pay $7.8 million - or a unit land price of $38.35 psf per plot ratio.