CEL Development, a property arm of Chip Eng Seng, submitted the highest offer of $152.7 million, outbidding 17 other bidders for a residential site on Simei Street 3.
The offer, which translates to $523 psf ppr, was higher than analysts’ earlier estimates of $295-$410 when the land parcel was released on March 23. URA closed the public tender yesterday.
The next highest bid of $148 million, or $507 psf ppr was submitted by Frasers Centrepoint – just three percent lower than CEL’s bid.
The top bid was 34 percent higher than the lowest bid of $113.8 million, or $390 psf ppr from Allgreen Properties.
Other bidders included UOL Group, MCL Land, Far East Organization, Hong Leong Group and Keppel Land.
According to several analysts, the tender stirred strong interest because the site, which has a maximum gross floor area of about 292,000 sq ft, sits in the established Simei HDB estate and across the road from Eastpoint shopping mall and Simei MRT Station.
The new project is expected to be popular with private home owners and HDB upgraders because of its amenities and accessibility.
Mr. Li Hiaw Ho, research director of CBRE, said that the 18 bids represent a level of interest not seen in the last five years in a state land tender of this size and quantum – above $100 million. “This demonstrates the strength of a location that is close to an MRT station, as well as developers’ confidence in the residential market going forward,” he said.
CEL said that it plans to build a project, comprising about 280 units that range from studio apartments to four-bedroom units, if it is awarded the site. The development is expected to be launched early in 2011, it said.
Mr. Li said that the top bid of $523 psf ppr works out to a breakeven cost of $860 psf to $900 psf. The new project could sell for about $1,000 psf if it is launched in H1 2011, he said.
Chip Eng Seng could have bid aggressively as it has development and construction arms, which means it can better manage its construction cost, said Mr. Nicholas Mak, a property lecturer from Ngee Ann Polytechnic.
Mr. Mak stressed that several other groups with construction and development arms also made aggressive bids for the site. “If they buy the site, their construction division will also have another job,” he said.