Source : Straits Times – 9th Sep 2009
IN A further sign of relentless demand for residential properties, a land parcel at Dakota Crescent has drawn 13 bids and a higher-than-expected top bid of $329 million. The highest bid for the 99-year leasehold site next to the planned Dakota MRT station came from UOL, which offered $508 per sq ft of gross floor area. This was way above the trigger price of $130 million, or $201 psf of gross floor area for the reserve list site. And it exceeds analysts’ expectations of between $350 and $370 psf of gross floor area for the site that fronts the Geylang River.
It approaches levels set around the peak of the market boom in June 2007 when Ho Bee Investment paid $524 psf per plot ratio for its Dakota Residences site. It launched its condo last year at an average price of about $970 psf.
Other developers keen to acquire the Dakota Crescent plot included Guoco-Land, Ho Bee which tied with NTUC Choice Homes, Sim Lian Land, Keppel Land, Allgreen Properties and Teambuild Properties. The lowest bid came from Lippo Estates. It was $160 million, or $247 psf of gross floor area. Reserve list sites are put up for tender only if developers indicate an interest by committing to a minimum acceptable bid.
‘The message is quite clear. The results show that developers are still hungry for land,’ said Colliers International executive director (investment sales) Ho Eng Joo. Restarting the confirmed list sales – with sites tendered out on a fixed schedule, without preconditions such as developer expressions of interest – now looks more likely, he said. Confirmed list sales were halted by the Government last October when the property market was in the doldrums.
Developers largely stopped buying land until recently. The first state plot to be launched for sale in a year – in Bukit Panjang – attracted 13 bids last month, a number that an analyst described as impressive. DTZ’s head of SEA Research Chua Chor Hoon said: ‘The high number of bids and closeness of the top bid to the price of the other Dakota site sold in June 2007 reflect a strong demand among developers for sites. ‘The Government is likely to put on some confirmed list sites, and also expand on the reserve list.’ UOL’sbid will likely translate into a break-even price of about $850 psf to $900 psf for the condominium project to be built on the site, said CBRE Research executive director Li Hiaw Ho.
Based on this estimate, the final selling price could range from $1,000 psf to $1,100 psf, he added. Recent caveats of the next-door Dakota Residences show that deals were concluded at prices ranging from $830 psf to $930 psf. Resale transactions of five-room and executive HDB flats in Dakota Crescent and Pine Close have come in at between $550,000 and $620,000.
‘The optimistic bid reflects developers’ confidence in mid-tier residential projects in the fringe areas with immediate MRT access,’ Mr Li said. The site, he added, is within walking distance of the Dakota MRT station and overlooks the landed housing estate in Katong along Goodman and Wilkinson roads.
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