3rd site triggered for sale in 3 weeks

Source : Straits Times – 8 Aug 2009

YET another government land parcel has been triggered for sale after a developer committed to bid at least $40.5 million for the site at the corner of Yio Chu Kang and Seletar roads.

The site is the third government plot triggered for sale in as many weeks after developers tendered bids on land in Dakota Crescent and Chestnut Avenue.

‘Developers are looking at the market two years down the road,’ said Jones Lang LaSalle’s head of South-east Asia research Chua Yang Liang.

‘We are still in a contraction mode but the global credit crunch has eased somewhat in Singapore and there is more certainty that we’ve seen the worst.’

The recent run-up in demand also points to a more positive mood, he said.

The latest land parcel is a 2.1ha commercial and residential site located within the established residential area at Seletar Hills and near the future Seletar Aerospace Park.

With a gross plot ratio of 1.4, it can generate a maximum permissible gross floor area of about 29,400 sq m.

The Urban Redevelopment Authority (URA) estimates the site can accommodate 225 housing units.

Shops and food and beverage outlets can be built on 4,500 sq m of commercial space within the proposed development.

Interest in the site is likely to be strong, given the high demand for suburban condos, experts said.

‘Given the current pace of sales for suburban condominiums now, the interest for land sites is high and the response to this site should be strong, with likely six to eight bidders,’ said the executive director of CBRE Research, Mr Li Hiaw Ho.

Bids are expected to range from $250 to $300 per sq ft per plot ratio, he said.

At that level, they will be about 95 per cent to 134 per cent above the trigger price, which works out to $128 psf per plot ratio.

Mr Li said new apartments on the site should fetch prices of between $700 and $750 psf.

This is based on the expected bids and the resale prices of some of the newer condominium units in the Yio Chu Kang area, which are going at between $600 and $700 psf.

The site was made available for sale via the reserve list system.

Under this sale method, a site goes up for tender only if developers indicate interest by committing to a minimum bid.

There had been much uncertainty in the market earlier, with developers showing little interest in buying sites, but the pick-up in recent months has been fast and furious.

Chesterton Suntec International research and consultancy director Colin Tan said the triggering of the Seletar site is another sign of the strong demand out there.

‘Even the developers feel that there is enough demand out there. It’s the market talking,’ said Mr Tan.

‘If the demand from investors is so strong…, then the Government should announce immediately that it will be activating the confirmed list once again at the next review,’ he said.

This should cool the market by telling investors that, with more supply coming up, the potential for higher profits will not be there, he said.

Under the confirmed list, sites are put up for tender at scheduled dates, regardless of developers’ interest.

The URA said it will launch the tender for the Seletar Road site in about two weeks. The date will be announced later.