A public tender for a 99-year leasehold residential site next to Potong Pasir MRT Station has fetched a record price of $607 psf ppr.
This was the second highest price paid for a 99-year leasehold site sold by the government in the country’s Rest of Central Region.
However, market analysts explained that aside from the top two bids, which both came from foreign developers (Qingdao construction of China and SP Setia Bhd of Malaysia), the offered prices from local bidders were within price expectations.
Chua Chor Hoon, South-east Asia research head of DTZ, said that “more foreign players are entering the local property development market as they see growth opportunities in Singapore.”
“As they’ve no or very little landbank in Singapore, they have to bid more aggressively than local developers to gain a foothold.”
Yesterday’s public tender drew 15 bids, as the site’s small size area rendered the total investment quantum affordable to a wider pool of contenders.
The competition among developers and the attractive location of the site near an MRT station helped create a bullish top bid, said some industry players.
There was a huge gap between the top two bids, which came in at about $600 psf ppr. The next three bids, which were offered by Koh Brothers, Far East Organization and Allgreen Properties, were recorded at around the $500 psf ppr level.
When the 53,516-sq-ft land plot at Pheng Geck Avenue was released in April, many analysts had expected a bid of around $450 psf to $560 psf.
Zuo Haibin, director of Qingdao Construction, said that Qingdao’s offer was “not cheap”, but stressed that it had not been able to snap any land site at any public tender in the past eight months.
The company’s breakeven cost is likely to be $950 psf, and it will handle the construction of the project as well.
Mr. Zuo added that Qingdao is looking at an average selling price of between $1,000 psf and $1,050 psf, though the actual selling price will depend on market conditions when the project is launched, which is expected at the end of the year.
The company’s proposed project comprises 150 to 160 apartment units, ranging from one- to four-room units, as well as two levels of basement carparking.
The new project will be the company’s third property development in the country, and it is also developing Natura Loft, a DBSS project in Bishan for HDB.