Developer commits to bid at least $82m for Upper Thomson Rd plot

Source : Channel NewsAsia – 23 Sep 2009

The government has accepted an application from a developer to put up a residential site at Upper Thomson Road for public tender.

The land parcel is near Lower Peirce Reservoir Park and Bishan Park. With a site area of about 2.08 ha, the land parcel can generate a maximum permissible gross floor area of 43,781 sqm.

It is being offered under the Reserve List of the Government Land Sales programme.

Under the Reserve List system, the government will put up a Reserve List site for public tender if it receives an application from a developer who commits to bid for the site at or above a minimum price which is acceptable to the government.

The Urban Redevelopment Authority (URA) said the developer has committed to bid a price of not less than S$82m for the land parcel.

The land parcel is the first to be up for tender since the government announced measures to rein in speculation in the property market two weeks ago.

But analysts said that the anti-speculation measures are not likely to dampen developers’ enthusiasm for choice sites. They expect strong demand for the parcel put up for tender, as developers take the opportunity to land bank.

Property consultant Nicholas Mak said: “Upper Thomson Road will still attract developer interest because it’s quite an established residential area, and the site itself has its attractions.

“For example, it has the potential (for a developer) to build a high-rise condo (there) that can offer great view of the country club across the road and some landscapes and features.”

Donald Han, managing director of Cushman & Wakefield, said: “Despite the government’s stabilisation measures introduced two weeks ago, the market still has legs to run, certainly, confidence coming from the developers still hungry for land-banking process. In particular, this site will cater to HDB upgraders. It’s well connected, has excellent views of Pierce Reservoir, (is) near the park.”

Analysts said the number of bids in this tender will likely be lower than the record 13 seen in recent tenders for sites at Dakota Crescent and Chestnut Avenue.

They expect bids for the Thomson site to come in at between S$180 million and S$190 million.

Donald Han said: “You’ll end up (having) a break-even price of about close to S$700, S$720 per square foot. So for developers to make money – 10 to 12% profit – we’re looking at selling this at about S$820, about S$850 per square foot.”

This compares well with other developments in the area, such as Meadows@Pierce which sold at about S$900 per square foot.

Going forward, however, analysts said demand for land could come down.

That’s because developers will find themselves having a wider range of sites to choose from when the government brings back its Confirmed List in the first half of next year.

Nicholas Mak said: “Going ahead, especially going into next year, developers are going to have a wider range of choices of sites. And the government will also be introducing, restarting the confirmed list. Which means we will have a series of sites in the market for sale based on a certain schedule.”

The Confirmed List has been suspended since the start of the year, due to poor market conditions. Sites under the Confirmed List are released for tender at a pre-determined date, without the need for the sale to be triggered by a bid.