A large residential site in Sims Drive had reeled in only four bids when the tender closed yesterday
, with a top bid deemed cautious by most experts.Still, some other market watchers felt the top bid was bullish given current weak conditions.
With a maximum gross floor area of 771,775 sq ft, analysts said the parcel was the largest to hit the market in two years.
They said some developers were likely to have been deterred by the huge cost of developing it.
The 99-year leasehold plot spans 257,258 sq ft, and can yield about 900 units.
The top bid came from Malaysian-controlled developer GuocoLand, which beat the competition with a price of $530.9 million, or $688 per sq ft (psf) per plot ratio (ppr). This was 5.8 per cent more than the second-highest offer of $502 million – or $650 psf ppr – from a tie-up between City Developments, Hong Leong Group and TID Residential.
Sim Lian Land came in last with its offer of $356 million – 49 per cent below GuocoLand’s bid.
The huge gap was reflective of “a highly uncertain outlook for the residential segment amongst developers.”
The top bid was significantly lower than the highest bid lodged for a site in Geylang East Avenue 1 in January, just 400m away. It closed with an offer that was 12.8 per cent higher at $776 psf ppr.
But it had been pointed out that the 67,146 sq ft site is smaller, and would be more attractive to developers.
“A bigger land parcel would attract less demand due to the huge quantum required. Smaller developers would not be able to compete unless they form joint ventures.”
However, GuocoLand’s bid still exceeded the expectations of some analysts.
The top bid was “relatively high” compared with the results of the tender for a site in Prince Charles Crescent, which analyst felt was in a “superior” location.The 268,713 sq ft plot near River Valley Road was won by a consortium made up of UOL Venture Investments and Kheng Leong Company for $463.1 million, or $821 psf ppr.
Another analyst also felt that the bid was “bullish” in today’s tepid property market.
“The optimism in the bidding could be partly attributed to the lack of new full-sized condominium developments in the vicinity, while the supply of unsold units in the area is not large.”
The break-even price of the new development is expected to be $1,090 psf to $1,130 psf and that it could be sold for $1,220 psf to $1,300 psf.
Sources: The Business Times
Sims Residence is strategically located at the corner of Sims Drive and Aljunied Road, this highly accessible residential development offers the best of all worlds, from convenient islandwide connectivity to a myriad of varying F&B and recreational options within an established neighbourhood. Read LOCATION to get more details...
