6th Design, Build and Sell site up for sale in Toa Payoh

Source : Business Times - 27 Jun 2008

30% of units built must be equivalent to 4-room or smaller HDB flats

THE Housing and Development Board (HDB) is selling a site on Lorong 1A Toa Payoh by tender under the Design, Build and Sell Scheme (DBSS) - the sixth since the first such site was awarded in January 2006.

The latest site measures 295,790.9 square feet and has an allowable gross floor area (GFA) of 1.24 million sq ft.

HDB said that the successful tenderer has to build at least 30 per cent of the flats with a floor area of 1,022.6 sq ft or less - equivalent to 4-room or smaller flats.

Knight Frank director (research and consultancy) Nicholas Mak believes that the site could draw bids of $150-200 per sq ft per plot ratio (psf ppr).

While this is lower than the $237 psf ppr that Qingdao Construction Group Corporation paid for a DBSS site in Bishan in February, Mr Mak believes that developers will have to factor in market conditions and higher construction costs.

The developer will also have to be sensitive about pricing, he said.

‘This kind of project will basically be a bread-and-butter project. The developer will need to sell at quite a fast pace.’

DBSS homes are essentially HDB homes and are not part of the Government Land Sales Programme.

So, potential DBSS units are not considered when calculating future private home supply.

‘It is more likely to affect supply and demand of HDB homes,’ Mr Mak added.

Chesterton International head of research and consultancy Colin Tan said that as with normal HDB flats, eligibility based on household income applies, so the supply of more DBSS flats should not have much of an impact on the private property market.

He added, however, that some HDB upgraders could decide to buy DBSS flats rather than upgrade to entry-level private condominiums.

Also, he said: ‘This Toa Payoh site will appeal to existing residents in the neighbourhood. There is already a captive market.’

Consultants agree that the launch price of the development is not likely to be more than that of the recently launched City View @ Boon Keng, a DBSS site awarded in May for $233.74 psf ppr.

The average price for City View is understood to be $520 psf.

However, in April, HDB awarded a nearby site on Lorong 2/3 Toa Payoh for a private condominium project to the highest bid of $460 psf ppr.

Analysts had estimated that based on the breakeven price, the condo could be launched at $950-1,000 psf.