Govt to put up Chestnut Ave site for tender

Source : Business Times – 21 Jul 2009

Consultants forecast top bid of $136 to $200 psf ppr for the residential site

Strong homes sales in the mass-market segment have led to a 99-year leasehold site at Chestnut Avenue in the state’s reserve list being triggered for launch.

This will be the first time in a year that the government will be launching a residential site for tender.

The successful applicant has undertaken to bid at least $62 million at the tender, which works out to $120.83 per square foot of potential gross floor area. Under the reserve list system, the state will launch a site for tender only if there is an application by a developer undertaking to bid at a minimum price acceptable to the government.

Property consultants indicated a wide price range for the successful bid for the site at the tender, which will be launched soon – $136 to $200 psf per plot ratio (psf ppr).

Assuming the site fetches $200 psf ppr, the breakeven cost for a new condo could be about $480 psf and the developer could be looking to sell at an average price of $600-620 psf, says Knight Frank chairman Tan Tiong Cheng.

CB Richard Ellis executive director Li Hiaw Ho, who reckons the successful bid could come in at $150-160 psf ppr, said that the developer would be planning to sell the new project at above $600 psf. ‘The site is located at the edge of the Bukit Panjang HDB estate and Chestnut Avenue landed estate.

‘Based on the current strong take-up of new projects, coupled with a lack of mass-market projects in this location, it is likely that developers will be interested to bid for this site.’

However, DTZ’s head of South-east Asia research Chua Chor Hoon, predicts the site will fetch only $120-136 psf ppr. ‘The site is not very accessible by public transport. So I don’t think it will attract many bidders,’ she added.

Knight Frank’s Mr Tan said that a new condo on the project will offer views of the surrounding park and Upper Peirce Reservoir. ‘However, it will also be fairly noisy, as it will be located next to the BKE.’

The 244,345 sq ft plot can be developed into a condo with about 450 units, CBRE estimates. The site has a plot ratio (ratio of maximum potential gross floor area to land area) of 2.1.

After the strong wave of launches over the past five months, the pipeline of 99-year leasehold suburban condos catering to upgrader demand has shrunk.

Projects that have yet to be launched include those that will be developed by TID in Tanah Merah, Far East Organization on a plum Ang Mo Kio site, NTUC Choice Homes on its plot near Braddell MRT Station and MCL’s project in Yishun. Others include a project on the former Minton Rise site in Hougang and condos in Bedok Reservoir and Pasir Ris.

‘Developers catering to the upgrader market are hungry for land, and the best supplier of land in this segment will be the government,’ notes Mr Tan.

Separately, City Developments yesterday said that it has sold 55 units at its freehold Volari condo in the Balmoral area at an average price of ‘over $2,000 psf’.

About 20 per cent of buyers took up the interest absorption scheme. Foreigners comprise 45 per cent of buyers. Prices have been adjusted upwards by 2 per cent.