TODAY Online : Developers eager for condo sites

Developers eager for condo sites

05:55 AM Feb 05, 2010

by Millet Enriquez

SINGAPORE - Developers still appear hungry for land that can be used for condominium development.

A tender for a land parcel in Sengkang saw robust bidding, with the top offer coming in at over $200 million.

Industry experts said it is sign that developers are still eager to snap up good sites.

The site in Sengkang West Avenue and Fernvale Link received bids from 10 developers, with Sunmaster Holdings submitting an offer of $200.5 million - more than 2.5 times the minimum bid of $70 million.

The price translates to $365 per square foot (psf) for the 16,998.8-sq-m land area launched by the Housing and Development Board (HDB) on a 99-year lease.

The next highest bid came from Tuas Hi-Tech Park, with a bid of $177 million.

The lowest bid of $115.6 million was by Lippo Estates.

The HDB said it will evaluate the provisional results and the tender will be awarded in the next two weeks.

Industry observers say the top bid was very bullish. The break-even cost would be about $730 to $760 psf, said Nicholas Mak, Real Estate lecturer in Ngee Ann Polytechnic.

"It looks like developers are still somewhat hungry for good development sites," he said.

The bid for the site is much higher than the recent transacted average price of Compass Heights at $670 psf, which is a few LRT stations away.

But the price is comparable to the $750 psf of The Quartz near the Buangkok MRT station, Mr Mak added.

"It's quite expensive," said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.

This could only be a result of liquidity and pent-up demand, he said.

"That could explain why developers are bidding a high price for a development in a far-flung area like Sengkang," said Mr Tan.

Ms Tay Huey Ying, director of Research and Advisory at Colliers International, agrees the top bid reflects the optimistic sentiment of developers.

"This signifies that the Government's strategy of reining in land price by increasing supply through the Confirmed List is taking effect," she said.

In 2009, three other residential sites received bids that were higher than $200 million, said Mr Mak.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved