Property developer MCL Land outbid six other developers for a 99-year leasehold residential site at the junction of Hougang Avenue 2 and Yio Chu Kang Road.
MCL Land offered a top bid of $207.5 million, which translates to about $456 psf ppr. This was higher than the analysts’ projection of $310 psf ppr to $350 psf ppr when the residential site was first triggered to be put up for sale more than a month ago.
“While the number of bids, at seven, are within expectations, the bid prices are fairly bullish,” said Li Hiaw Ho, executive director of CBRE Research.
“The top bid of $207.5 million, or $456 psf ppr, will translate to a breakeven cost of about $780 to $800 psf for a low-rise condominium project. The new project could probably fetch around $900-$950 psf when launched in 2011.”
The developer said it will build a 450- to 500-unit project if the site will be awarded to them. It added that most of the units will be one- and two-room units, as well as several smaller three-room units. The project will be launched after nine to 12 months.
The top bid offered by MCL Land was 10 percent higher than the second-highest bid of $189.3 million, or $416 psf ppr from Frasers Centrepoint, and 21 percent higher than the $171-million or $376 psf ppr by Sim Lian Land.
Several analysts said that MCL Land might have been bullish in obtaining the top bid, as it was the company’s sixth attempt in a government land sale tender since 2009.
“It has been unsuccessful in the previous five land tenders, which may explain why it is more aggressive in this tender, bidding 10 per cent higher than the second highest bidder,” said Nicholas Mak, a real estate lecturer from Ngee Ann Polytechnic.
The land site was triggered to be put up for sale after a developer agreed to bid at least $109.9 million or $241 psf ppr in April.