Just 2 Bids For Ten Mile Junction Site

Source : The Business Times, April 4, 2008

Kheng Leong unit offers $162.40 psf ppr; Sim Lian Land, $121.60 psf ppr

THE public tender for an unusual development site at Choa Chu Kang Road and Woodlands Road has closed with just two bids received.

The site, on which the state-owned Ten Mile Junction currently sits, received a bid of $61 million or about $162.40 per square foot per plot ratio (psf ppr) from Peak Green Pte Ltd.

The company is understood to be linked to Kheng Leong, the privately owned property group controlled by the family of banker Wee Cho Yaw.

The second, lower bid of $45.68 million, or $121.60 psf ppr, was put in by Sim Lian Land.

Earlier estimates had put the value of the site at between $200 psf ppr and $250 psf ppr.

Savills Singapore director of marketing and business development Ku Swee Yong said that he was surprised by the lower-than-expected bid, but added that rising construction costs may have been a factor.

Recently, a development site at Jurong West was not awarded because the highest bid received was considered to be too low by the government.

But while Mr Ku did not know if the higher bid for the Ten Mile Junction site would top the reserve price for the site, he said: ‘I think the site should be awarded.’

‘This area is very local and I believe the household incomes are lower,’ he added.

Knight Frank director of research and consultancy Nicholas Mak noted that the current bid is one of the lowest in recent years.

‘The previous time when land tender bids of below $200 psf ppr were submitted was in the period from 2000 to 2002.

‘But during that period, the government did sell some of the sites at prices below $200 psf ppr.’

On whether the Ten Mile Junction site would be awarded, Mr Mak said that it depended on whether market conditions were the same as those during 2000-2002. ‘There is a 50/50 chance,’ he added.

The site, which has a residential potential gross floor area of 254,394 sq ft, could have between 200 and 240 apartments.

The existing commercial GFA is 121,191 sq ft.

CB Richard Ellis Research executive director Li Hiaw Ho said that if the site were awarded, the breakeven price for the newly developed residential project will be around $400 psf. This will translate to a possible selling price of about $500 psf.

Units in Yew Tee Residences, a new 99-year leasehold project and Maysprings, the development closest to the subject site, were transacted at $520-550 psf, he noted.