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Fri, Oct 30, 2020 – 5:50 am
Singapore
HEALTHY home sales in the past five months reduced the inventory of real estate developers, which in turn increased their appetite for land.
This was reflected in stronger-than-expected top bids for two 99-year-old lease sites at state land bid closings on Thursday. The absolute price, considered relatively acceptable to developers, helped drive their attraction in what was the first residential government land sales (GLS) bidding closure since the reopening of Phase 2 of the Singapore economy after closing. Partial tax to contain Covid-19.
Of the two parcels, the most contested is adjacent to the Tanah Merah MRT station.
The site, zoned for residential, with commercial units on the first floor, attracted 15 tenders. The highest bid from MCC Land (Singapore), part of a diversified Chinese SOE, was S $ 248.99 million or approximately S $ 930 per square foot per parcel ratio (psf ppr). This was 4.6 percent higher than the second highest bid from an alliance between City Developments Ltd (CDL) and TID.
The other parcel, an executive condominium (CE) housing parcel at 9 Yishun Avenue, won seven bids.
Sing Holdings’ highest bid was S $ 373.5 million or S $ 576 psf ppr; this was 8.9 percent higher than the second-highest bid from a partnership between CDL and Hongkong Land’s subsidiary, MCL Land.
CBRE Head of Research for South East Asia, Desmond Sim, said: “Given the environment of rising construction costs, the respective offer prices are likely to set new benchmark launch prices at S $ psf for their respective markets and asset classes in the future. “
ERA Realty’s head of research and consulting, Nicholas Mak, estimates MCC Land’s equilibrium cost for the parcel at Tanah Merah Kechil Link to be between $ 1,480 and S $ 1,540 psf.
Showsuite Consultancy CEO Karamjit Singh commented that the highest bid would require the developer to sell the new apartments for around S $ 1,700 to S $ 1,800 psf, which is “bullish, considering that new units in that area they are currently trading at between $ 1,500 psf. ” and $ 1,600 psf “.
Tan Zhiyong, Managing Director of MCC Land (Singapore), said: “We are very confident in developing an interesting residential landmark with approximately 2,000 square meters of commercial space on this relatively large site. It will be a very livable environment packed with sustainable features.” .
The company is a subsidiary of Metallurgical Corporation of China, a Fortune Global 500 company listed in Hong Kong and Shanghai.
JLL Singapore senior director for research and consulting Ong Teck Hui noted that the residential component of the Tanah Merah project is likely to launch in late 2021, when purchase demand could further improve along with the expected economic recovery.
Ong also said that stronger-than-expected bidding participation and maximum bid for the parcel could point to a growing demand for residential land, in anticipation of a market recovery in 2021. “If the GLS program continues to be conservative as offer sites for sale, there could be a spill-over effect on the crowdsale market to meet developer demand. “
The parcel of land can produce around 265 homes in addition to the commercial space.
For the Yishun EC land, Sing Holdings CEO and Managing Director, the highest bidder, Lee Sze Hao, said the group’s proposed scheme for the site is a 15-story project with full condo facilities. “We are looking at almost 700 units: two, three and four bedroom units. This will be EC’s first site in Yishun since 2014.”
ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions, which are completely phased out 10 years after the project is completed.
Mr. Mak estimates the equilibrium cost for the Yishun Avenue 9 EC site to be between S $ 1,000 and S $ 1,050 psf. “The developer probably plans to launch the new EC at prices above S $ 1,100 psf.”
JLL’s Mr. Ong noted that since the EC in Yishun tends to fetch mediocre prices, the maximum bid of S $ 576 psf ppr appears robust. “The last EC tender on Fernvale Lane in March 2020 reached a top bid of $ 555 per cent per cent per person.”
They also bid on the Yishun Avenue 9 EC parcel on Thursday were:
- Hong Leong Holdings unit, Intrepid Investments, in association with TID Residential (about S $ 515 psf ppr);
- EL Development (S $ 506 psf ppr);
- CSC Land Group (S $ 460 psf ppr);
- An alliance between Creative Investments of Amara Holdings, Santarli Capital Venture and Kay Lim Realty (S $ 449 psf ppr);
- Chip Eng Seng unit, CEL Development, in association with Singhaiyi Investments and Ultra Infinity of KSH (S $ 413 psf ppr).
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