Another condo site to go on sale

Source : Business Times – 23 Jul 2009

URA gets offer for 99-year leasehold site on reserve list at Dakota Crescent

For the second time this week, a 99-year leasehold condo site on the government reserve list has been triggered for launch.

Urban Redevelopment Authority said yesterday it has received a successful application for the 1.7 hectare site, which is located at Dakota Crescent and is next to the Dakota Residences condo being developed by Ho Bee.

The developer that successfully applied for the latest plot to be released has undertaken to bid for the site at a minimum $130 million, which works out to about $200 per square foot of potential gross floor area.

This is 62 per cent lower than the $524 psf per plot ratio (psf ppr) that Ho Bee paid for its site in June 2007. Ho Bee launched Dakota Residences at an average price of about $970 psf last year.

It relaunched the project a few months ago at an average price of about $900 psf. URA’s monthly developer sales figures for June show a total 27 units were sold in the project during the month at a median price of $870 psf.

Knight Frank chairman Tan Tiong Cheng reckons the top bid for the site could be about $350 psf ppr, which would work out to a breakeven cost of of slightly below $700 psf. ‘Bidding should be hot.

‘The site is next to Dakota MRT station and fronts the Geylang River. And it’s in a proven location,’ he added.

Based on URA statistics, Ho Bee had sold about 60 per cent of the 348-unit Dakota Residences as at the end of last month.

Earlier this week, the Housing & Development Board (HDB) said it will launch the tender for a 99-year leasehold site for a condominium development at Chestnut Avenue on the reserve list after receiving a successful application.

Following up on that announcement, HDB said yesterday that the tender for the site will close at noon on Aug 19. That plot was also from the government’s reserve list, and its launch follows a successful application by an unnamed party undertaking to bid at least $62 million at the tender, which works out to $120.83 psf ppr.

Mr Tan expects developers to trigger launches of more residential sites from the government reserve list, as it offers a good source of land for developing entry-level condos catering to HDB upgraders.

‘Right now, a lot of developers are focusing on the mass market; they’ve seen a recovery in the low end and it seems a safer bet. They may already have enough stock of high-end sites,’ he added.

Locations of residential sites in the second-half 2009 reserve list include Tampines, Jalan Jurong Kechil, Upper Thomson Road, Bishan St 14 and Serangoon Avenue 3.