Aug 13, 2008
THE property slowdown was clear for all to see yesterday when the tender for a condo site overlooking Bedok Reservoir closed with just one bid – and at a price well below expectations.
The Urban Redevelopment Authority (URA) will likely refuse to award the 3.2ha site, given the poor offer, consultants said.
Boon Keng Development bid $84.6 million, or $118 per sq ft (psf), for the 99-year leasehold site but consultants had expected anything from $150 to $230 psf.
Apartments on the site could sell for up to $700 psf, they said.
If Boon Keng does secure the site at the junction of Tampines Avenues 1 and 10, its break-even would be about $480 to $500 psf. It would then be able to sell the apartments for around $600 psf, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak. But he does not expect the URA to sell the land at such a low price.
The increasingly cautious mood among developers explains why the site drew only one bid.
‘If this site was not on the confirmed list, it may not be triggered for tender,’ said Mr Mak.
Confirmed list sites are tendered out at pre-determined dates regardless of whether developers have shown interest.
‘If confirmed list sites were launched for tender in an increasingly uncertain market, they would attract opportunistic bids, such as the one we witnessed today,’ said Mr Mak.
Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, who had tipped bids of $150 to $180 psf for the site, said: ‘Most developers have ample land, so unless a choice plot is available, they won’t bid.’
Rising building costs are forcing developers to look for cheaper land. In such a climate, the Government has to decide whether to lower reserve prices to ensure a steady supply of mass-market private housing, or maintain the value of plots on the sales list as they form part of the nation’s reserve, said Mr Mak.
He does not expect any residential site on the government sales list to be triggered for tender unless reserve prices are lowered. If not, there could be a sharp drop in the sale of residential land from the Government this year.
Singapore tenders out land on the reserve list if developers indicate interest by committing to a minimum bid acceptable to them.