ST : Hougang condo plot draws six bidders

Sep 18, 2010

Hougang condo plot draws six bidders

Cautious tenders show developers less bullish about residential market

By Joyce Teo

A CONDOMINIUM plot in Hougang Avenue 7 has attracted six bidders, but their fairly conservative tenders show that developers are taking a cautious approach.

The top bid of $160 million or $339.6 per sq ft per plot ratio (psf ppr) came from Sim Lian Land.

Its offer was just 2.5 per cent above the second highest bid of $331.3 psf ppr from a Hoi Hup Realty, Sunway Developments and SC Wong Holdings joint venture.

Analysts had expected bids between $320 and $370 psf ppr.

Sim Lian's bid was also only 50 per cent above the bottom bid of $225 psf ppr from Meadows Investment, a firm owned by Tiong Aik Group executive director Neo Tiam Boon.

Other bidders include GuocoLand's First Changi Development and Hong Leong Group's Intrepid Investments.

Sim Lian wants to build 400 to 450 units, with a good mix of two- to four-bedders, said Sim Lian Group executive director Diana Kuik.

The launch could be in the next nine to 12 months, although a lot would depend on the market conditions, Ms Kuik added.

The 99-year leasehold Hougang plot is within the Hougang Housing Board estate. It is 15,630 sq m in size, with a maximum gross floor area of 43,765 sq m.

CBRE Research executive director Li Hiaw Ho said the six bids showed that developers are interested, but 'as the top bid is only 50 per cent higher than the last bid, it shows that developers are cautious and less bullish about the residential market'.

The Government had announced measures to cool the property market on Aug 30. While the impact is not clear as yet, experts expect home sales this year to be hit.

Cushman & Wakefield managing director Donald Han said the tender results showed that developers are 'constrained' in their bids.

'They are no longer putting in aggressive bids that will lead to runaway prices. If you miss this, you can go for another site coming up for tender,' he said.

You can now see the impact of the cooling measures on developers' price expectations, he added.

DTZ head of South- east Asia research Chua Chor Hoon believes developers are now more selective in bidding for sites.

The Hougang plot is targeted at HDB upgraders, so the bids were adjusted accordingly, she said.

Ms Chua estimates a break-even cost of $640 psf, based on the top bid. The final selling price of the units could be around $770 psf.

CBRE's Mr Li said the top bid reflects a higher break-even cost of around $680 psf, and that units in the new project will possibly sell for $800 to $850 psf.

For comparison, units in the recently launched The Minton in Lorong Ah Soo sold at around $860 psf from June to August.

Units in Kovan Residences, adjacent to Kovan MRT station, were transacting at around $900 psf over the same period, Mr Li said.

joyceteo@sph.com.sg