BT : Jurong EC tender tale with a twist - and no bids

Business Times - 13 Aug 2010

Jurong EC tender tale with a twist - and no bids

Site's remoteness, supply of govt land in the pipeline cited for poor response

By EMILYN YAP

(SINGAPORE) The tender for an executive condominium (EC) site at Jurong West drew gasps of astonishment from market watchers when it closed yesterday - not because there were many bids but because there was absolutely none.

Observers attributed the lack of interest to the site's remoteness, and suggested that developers had become more selective given the many other pieces of state land available for sale.

The Housing and Development Board launched the 99-year leasehold site from the confirmed list for sale last month. It sits at Jurong West Street 42 and is some distance away from Lakeside MRT Station.

The site could have yielded around 460 units. Consultants which BT polled then did not think it was particularly attractive, but thought it might still reel in bids ranging from $230-$300 per square foot per plot ratio.

With no bids coming in, the site could be brought over to next year's government land sales (GLS) programme. The Ministry of National Development (MND) told BT that it will make future plans for the site known at a later date.

For an industry which has gotten used to seeing 10 or more developers vying for a residential site since the second half of 2009, the absence of any takers in the latest tender was surprising.

November 2008 was the last time when an EC site on the confirmed list saw no demand - the global downturn had kept developers away from the plot at Punggol. But it was subsequently sold in June and its tender drew five bids.

A developer who has been actively bidding for land told BT that he gave the tender of the Jurong West site a miss because the plot is not near an MRT station. Good location is especially important for ECs, he said. Furthermore, the government will be releasing more land and he has to 'reserve ammunition for better located sites'.

Consultants echoed these views. Colliers International investment sales executive director Ho Eng Joo said that developers are likely to be less aggressive and more selective given the many sites they will have to choose from.

The government has been increasing land supply as private home prices climbed in the last few quarters. The second half GLS offers 31 sites for private residences, which include a few other EC plots at areas such as Pasir Ris and Tampines.

Knight Frank's consultancy and research manager Ong Kah Seng also suggested that developers which bought land recently could be focusing on preparing those sites for launch.

Industry watchers hesitated to say if the lack of demand for the site at Jurong West signalled a cooling of the property market.

MND also said it was not possible to conclude so. Developers' participation in tenders 'is affected by several factors, of which location of the site and supply of sites are some of the considerations', it said.

In a report yesterday, CB Richard Ellis said it expects to see more activity in the EC market when four new projects with some 1,400 units altogether are launched in the next three to six months.

'Assuming the historical 30 per cent gap between private suburban homes and new ECs remains, median prices of new ECs are likely to stay at around $650 psf to $750 psf,' said CBRE Research executive director Li Hiaw Ho.

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