BT : Top bid for Ubi Rd industrial site springs a surprise

Business Times - 12 Aug 2010

Top bid for Ubi Rd industrial site springs a surprise

Oxley Rising offers $158.1m for 60-year leasehold site, double analyst estimates

By UMA SHANKARI

(SINGAPORE) Oxley Rising has emerged as the top bidder for a 3.5 hectare industrial site at Ubi Road 1.

The company, which offered $158.1 million or $169 per square foot per plot ratio (psf ppr) for the 60-year leasehold site, trumped 10 other bidders including Qingdao Construction (Singapore) and Sim Lian Holdings.

This is twice what analysts estimated the site could fetch when it was launched in June. Then, consultants reckoned that it could fetch $61-$75 million, or $65-80 psf ppr.

'The overwhelming interest in the land parcel could be due to (Singapore's) strong GDP growth of 18.8 per cent year-on-year in Q2 2010, driven by a 44.5 per cent year-on-year surge in manufacturing. This coupled with a robust take-up of 2.67 million sq ft of factory space in Q2 2010 could have created more interest in the land,' said Li Hiaw Ho, executive director of CBRE Research.

Oxley's top bid of $169 psf ppr was almost twice the amount of recent winning bids for industrial sites in Ubi that were awarded.

In fact, the last time that the $100 psf-level was breached for industrial land was in August 2009. Then, KNG Development paid $105 psf ppr for a 30-year leasehold site at Kaki Bukit Road 2.

And the only industrial land awarded under the government land sales programme for more than $169 psf ppr was a 30-year leasehold site that One Commonwealth now sits on. In November 2007, Chiu Teng Construction paid $170 psf ppr for it.

Oxley's top bid was 8 per cent higher than the second highest bid, which was from Qing Quan and Qingdao Construction (Singapore).

The two companies put in a joint bid of $146.6 million or $156 psf ppr. Oxley's bid was also 159 per cent higher than the lowest bid of $61.1 million or $65 psf ppr from Soilbuild Group.

The site has a land area of 375,150 sq ft and a 2.5 plot ratio, giving it a maximum gross floor area of 937,875 sq ft. It is zoned for 'Business 1' use, which means it can be developed for various uses such as clean and light industry - which includes computer software development, printing and publishing, assembly and repair of computer hardware and electronic equipment.

Mr Li said that the the breakeven cost for this development is estimated to be about $380 psf to $400 psf.

CBRE's data shows that in the first seven months of 2010, upper floor strata-titled units in the 60-year leasehold Vertex, located along Ubi Avenue 3, sold for between $309 psf and $409 psf while the ground floor units sold for $371 psf to $550 psf.

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