ST : Boon Lay Way site attracts 14 bids

May 5, 2010

Boon Lay Way site attracts 14 bids

Keppel Land puts in top bid of $303m for plot next to Lakeside station

By Joyce Teo

MORE than a dozen eager developers have vied for the right to build homes on a choice residential plot at Boon Lay Way, next to Lakeside MRT station.

The red-hot tender attracted a whopping 14 bids - including all the industry heavyweights - with the top three coming in well above analysts' expectations.

Keppel Land (Mayfair) put in the top bid of $499 per sq ft per plot ratio (psf ppr), or $302.98 million.

This was about 15 per cent above the No. 2 bid of $433 psf ppr, or $263 million, from China firm MCC Land (Singapore).

Qingdao Construction (Singapore) came in third, with a bid of $256.78 million, or $422.9 psf ppr.

Property experts had earlier tipped a wide range of possible bids, from as low as $260 psf ppr to $420 psf ppr. They had largely expected the units to sell for below $800 psf.

Other bidders included MCL Land, Far East Organization, Sing Holdings, Allgreen Properties, GuocoLand and Ho Bee Investment. Property giant CapitaLand's Cove Residential put in the lowest bid of $273 psf ppr, or $165.8 million.

The successful bidder will be announced at a later date, said the Urban Redevelopment Authority.

The 99-year leasehold plot is about 1.61ha, and could yield about 525 units.

Property experts estimate the break-even level of units on the site at $800 psf to $850 psf, based on the top bid.

This is already above average transaction prices of most condominiums in the vicinity, such as Caspian and Parc Vista.

Caspian has been selling for $650 psf to $800 psf in the subsale market in the past four months, while units in The Lakeshore have been sold at a slightly higher $680 psf to $900 psf, according to CBRE Research.

Its executive director, Mr Li Hiaw Ho, said: 'Assuming the residential market continues its present state of activity and growth, the future project on this site could fetch an average price of $900 psf to $950 psf by early next year.'

He is projecting a possible break-even level of $830 psf to $850 psf for the project.

Mr Li said the Boon Lay Way location will attract upgraders from nearby private and public housing estates as well as employees from surrounding industrial employment centres and Nanyang Technological University. Key attractions are that it is close to Lakeside MRT station and enjoys an unblocked view of Jurong Lake, among other attributes, he said.

DTZ's head of South-east Asia research, Ms Chua Chor Hoon, said: 'The strong tender results reflect the growing popularity of the area.

'Sites that are close to MRT stations are still popular. This one is more so because plans for Jurong regional centre are starting to take shape.'

The site is near the Jurong Lake District, which is to be transformed into a world-class leisure destination, as well as Jurong Gateway, which is earmarked to become the largest commercial hub outside the city centre.

Still, even allowing for the site's many attributes, the tender had attracted a surprisingly high number of bids, indicating that developers in Singapore are still very hungry for development sites, especially those located near MRT stations, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

'For a suburban development site, there is a significantly high number of condominium developments around the subject site, which could contribute to the potential supply of resale units,' he said.

But top bidders did not appear to be deterred by this, which shows they are very confident of attracting buyers, he said.

He said the strong demand among developers for land in Boon Lay is also a signal to the Government that it should include another major condo site in this area in its next land sales programme.

The Boon Lay Way site was launched for public tender in late March, together with two other sites.

It was on the confirmed list, whereby sites are put up for sale according to a fixed schedule of dates, regardless of developers' interest.

joyceteo@sph.com.sg