Solitary, low bid for Tampines site

August 13, 2008
Solitary, low bid for Tampines site
At $118 psf ppr it is below expectations, but analyst says site is
not plum anyway
By KALPANA RASHIWALA

(SINGAPORE) Cautious sentiment, soaring construction costs and a not-
so-hot site all combined to yield just one bid at a state tender
yesterday for a 99-year leasehold condo site at Tampines Ave 1/Ave 10
facing Bedok Reservoir.

The sole bid of about $118 per square foot per plot ratio (psf ppr)
was below general market expectations which ranged from $150 to $230
psf ppr.

The sole bidder at yesterday's tender was Boon Keng Development, a
unit of Midview group, which is involved in the construction and
property businesses.

Most property consultants reckon there's only a slim chance of the
site being awarded.

Looking at the $118 psf ppr sole bid at yesterday's tender, property
consultants told BT that no 99- year leasehold condo/ apartment site
has been sold at a lower price than this since 1991.

Yesterday's top bid, which was for a private condominium site, was
also below the $137 psf ppr at which the government sold a Design,
Build and Sell Scheme site in Simei for development into Housing &
Development Board flats in June.

'This outcome is negative for property market sentiment. It may be
even worse for sentiment if the government actually awards the site
as that could affect land valuations for other residential sites
too,' Knight Frank director (research and consultancy) Nicholas Mak
said.

However, Savills Singapore director (marketing and business
development) Ku Swee Yong noted that the Tampines site was not a plum
one to begin with.

'It does not have good attributes in terms of transportation links.
Neither is it near major amenities,' he said.

'Generally, developers already have good landbanks, so unless a very
good site comes along, we'll not see too much participation,' Mr Ku
said.

'But if a site with solid transportation connection and amenities
comes up, like the Ophir Road white site or the condo plot next to
Tanah Merah MRT station, these will be attention grabbers,' he added.

The tender for the Tanah Merah plot closes on Sept 9 while that for
the Ophir Road plot closes in December.

The $118 psf ppr bid for the Tampines plot, plus construction costs
of about $320-350 psf of gross floor area, reflects a breakeven cost
of about $500-550 psf for a new condo project.

Units in completed condos around the Bedok Reservoir area have been
selling at between $550 psf and $680 psf, although the new Waterfront
Waves condo which is being built on a choice spot along the reservoir
has achieved average prices of about $750 psf for pool-facing units
and $800 psf for reservoir-facing units.

The latest plot on Tampines Ave 1/Ave 10 can be built into a condo
with about 650 units. It was offered through the confirmed list of
the Government Land Sales Programme.

Debating the likelihood of the plot being awarded, a property
consultant who declined to be named said: 'There was just one bid.
But I hope the government will award this site if it wants to show
foreign investors that Singapore is a competitive place to invest in.'

Knight Frank's Mr Mak said that the government will gradually lower
reserve prices for sites offered through the Government Land Sales
Programme, to take into account rising construction costs and weak
property market sentiment.

'It's walking on a tight rope. The government can't trim reserve
prices too much as that may send a negative signal to the market;
besides it also has to protect the nation's reserves. But on the
other hand, if the reserve prices are maintained too high and sites
can't be awarded at state tenders, the government may not be able to
ensure a steady state of supply to avoid busts and booms in the
property market,' Mr Mak said.