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Only four residential ‘infill’ sites sold in auction held by SLA

AN AUCTION of eight small plots of state land yesterday attracted 50 registered bidders and many more onlookers but only half the sites were sold.

The subdued response reflects the mood in the property market, said observers, and is in contrast to a similar auction last November when all six plots offered were sold after brisk bidding.

Yesterday’s sale was the second held so far by the Singapore Land Authority (SLA), which is offloading residential ‘infill’ sites with fresh 99-year leases.

These are vacant pockets of state land located in the midst of established landed housing estates. They were either left untouched by nearby developments or were once used for public purposes.

Knight Frank auctioneer Mary Sai, who conducted the auction, said potential bidders were very cautious: ‘We heard the interest there but when they heard the starting bid, they refrained from bidding.’

Ms Sai said the bidders likely did not expect the opening price to be so high while site constraints and high construction costs might be dampening interest.

Take a site in Upper East Coast Road. It opened with a bid of $2.47 million or $334 per sq ft (psf) but there were no takers. It was reintroduced later at a starting bid of $2.1 million and attracted some bids but they failed to meet the reserve price and it was passed.

SLA’s reserve price, which is set by the chief valuer and not revealed to bidders, is slightly below the opening bid.

But there were some bright spots. The biggest plot on the list - a 15,461 sq ft good-class bungalow site in Ridout Road - was the most hotly contested property with 34 bids lodged by three hopefuls.

BreadTalk founder and chairman George Quek and his wife clinched the site with a bid of $8.96 million or $579.55 psf. This was 22.6 per cent above the opening bid of $7.31 million or $473 psf.

This site is right next to Mr Quek’s home and the family had been renting a portion of it for use as a garden for over two years.

Mr Quek said he will combine the land with his own.

The lowest-priced lot sold was a 4,720 sq ft site in Glasgow Road, near Rosyth Road, which is suitable for a three-storey bungalow. Mr Anthony Tan, 62, bought it for $710,000 or $150.40 psf - close to the starting bid of $680,000 or $144 psf.

‘It’s where my wife used to live and my daughter was born,’ said the retiree. He will build a single- storey house on the site but will continue to stay in his Serangoon Gardens house.

A 4,357 sq ft corner plot in Tanah Merah Kechil Road began with a bid of $1.36 million or $312 psf before going to Mr Ng Kim Hoe for $1.51 million or $347 psf. He had only one competitor.

Ms Martha Lim, 31, who runs her family business Lim Seng Kok Contractor, bought a 7,771 sq ft Namly Avenue plot for $2.63 million or $338 psf.

The bidding opened at $2.55 million. Ms Lim said she may keep the site for her own use or redevelop it for sale.

Yesterday, there were some bargain hunters among the crowd of about 200 at M Hotel. Others such as a resident in Ridout Road were there to see if the plot in the street sold.

SLA may release the unsold sites again after researching price levels.

Its deputy director of land sales, Mr Teo Jing Kok, said yesterday that the agency would work with the chief valuer to see if the prices are too high.

And there will be more of such auctions to come, he said. ‘We are looking at one or two land sale auctions a year, assuming there’s no downturn.’

Source : Straits Times - 22 Aug 2008

Analysts expect lukewarm response as fresh site is rolled out at Mohd Sultan

Sentiment in the Singapore office investment market is worsening, but Urban Redevelopment Authority yesterday rolled out another 15-year leasehold transitional office site as scheduled, this time in the pubbing district of Mohamed Sultan Road.

This is the seventh transitional office site URA has launched since July last year.

CB Richard Ellis executive director Li Hiaw Ho expects few bidders for the site and predicts bids of about $80 to $100 per square foot per plot ratio (psf ppr). ‘The site’s location in a mixed neighbourhood may appeal to businesses that don’t require a CBD location, and to businesses in the creative line,’ he said.

Knight Frank director Nicholas Mak projects a slightly higher price range of $100-$130 psf per plot ratio for the site, which is one of two transitional office plots slated for release in second half 2008. The other, at Mountbatten Road, will be launched next month.

Mr Mak reckons the Mohamed Sultan Road plot ‘may receive cautious or a few opportunistic bids’, citing that the expected completion time of the project on the plot could be close to 2010, when a large supply of office space from other projects is also slated for completion.

CBRE’s Mr Li, like some other industry watchers, said it may be timely for the Government to review the necessity of launching yet more transitional office sites in the near future given that the economic situation and outlook for the office market have changed since last year, when transitional office sites were first released.

The concept of these short-leasehold office sites outside the financial district, capable of being developed into low-rise office developments within a year, was devised to help ease the immediate-term office shortage last year. Prime and Grade A office rents nearly doubled in 2007 but the pace of increase has since eased with gains of around 7 to 10 per cent in the first-half of this year from end-2007 levels.

Morgan Stanley said last week it expects Singapore office rents to peak earlier, by end-2008 instead of end-2009, due to lower expectations for office demand, which will be below upcoming office supply (including business parks).

CBRE data shows that some 645,000 sq ft net lettable area of offices would be coming on stream in 2008-2009 from the five transitional sites awarded so far. Market watchers say that any further projects on transitional office sites sold today will be completed closer and closer to 2010, from which point several major office developments are slated for completion, including Marina Bay Financial Centre (MBFC) and Mapletree Business City.

About 10.1 million square feet of new office space will be completed between Q3 2008 and 2012, inclusive of the 645,000 sq ft of transitional offices, CBRE’s numbers show.

When contacted, a URA spokeswoman said: ‘We’ve received market feedback that there’s demand for transitional office sites at suitable locations from businesses which don’t need a city centre location and need office space urgently. The two sites at Mountbatten Road and Mohamed Sultan Road under the H2 2008 Government Land Sales (GLS) Programme are at the fringe of the city centre and are suitable for such developments. The supply of office from major office developments such as MBFC (Phase 1) in 2010 will go towards alleviating the current tight office market. Together, these different sources of office supply in the pipeline will help meet the overall demand for office space.

‘The Government will evaluate the market response to the tenders for the Mohamed Sultan Road and Mountbatten Road sites and decide on the release of such sites as part of the planning of first-half 2009 GLS Programme.’

The tender for the Mohamed Sultan Road transitional office site closes on Oct 14.

Separately, URA yesterday said it has accepted applications from parties (which it did not name) for the release of two 60-year leasehold industrial sites at Kallang Pudding Road and Ubi Avenue 4 in the reserve list. In both instances, the minimum price that the successful applicant has committed to bid is almost the same - $69.88 psf ppr for the Kallang Pudding plot and $69.85 psf ppr for the Ubi site, leading market watchers to guess the same party probably made both successful applications.

Source : Business Times - 20 Aug 2008

Its bid of about $198.82m works out to about $160 per sq ft per plot ratio

A CONSORTIUM led by Hoi Hup Realty has emerged as the top bidder for a Housing & Development Board Design, Build and Sell Scheme (DBSS) site at Lorong 1A Toa Payoh.

Its bid of about $198.82 million works out to about $160 per square foot per plot ratio (psf ppr). Market watchers estimate that the breakeven cost could be around $430-500 psf of saleable area.

The breakeven cost will depend not just on construction costs but also whether Hoi Hup succeeds in making its formal application to the Urban Redevelopment Authority in time to secure provisional permission before Oct 7.

After that date, bay windows and planter boxes will no longer be exempt from Gross Floor Area calculations, industry players noted. If Hoi Hup manages to get the exemption, its breakeven cost will be lower.

ERA Asia-Pacific associate director Eugene Lim reckons the selling price for the new HDB flats Hoi Hup can build on the site may be around $550 psf of saleable area.

Currently, in the HDB resale market, four-room flats (90 sq metres or 969 sq ft) are selling for about $540 psf while five-room flats (110 sq m or 1,184 sq ft) are selling for about $530 psf in the location, Mr Lim added.

‘As far as pricing is concerned, the threshold for HDB buyers of flats in Toa Payoh should not exceed $650,000 for five-room flats and $550,000 for four-room flats,’ according to Mr Lim.

He also commented that the top bid at yesterday’s tender was bullish - he had been expecting about $130 psf ppr - considering that it came from Hoi Hup, which is also developing City View @ Boon Keng DBSS flats.

These were launched earlier this year at an average of $520 psf. More than 80 per cent of the total 714 units have been sold so far.

The DBSS site at Lor 1A Toa Payoh, which is being offered on a 103-year leasehold tenure, can accommodate about 1,200 HDB flats comprising a mix of three-, four- and five-room flats, analysts estimate.

The consortium that entered the top bid at yesterday’s tender also includes Sunway Developments and Hoi Hup JV Development (whose shareholders include Straits Construction and Hoi Hup Realty).

The tender attracted two other bids - from TP Development Pte Ltd (a joint venture between Chip Eng Seng and AIG) which bid about $160.3 million or $129 psf ppr and Sim Lian Land ($130 million or $104.64 psf ppr).

Source : Business Times - 20 Aug 2008

RESPONSE is likely to be tepid for a tender for a transitional office site in Mohamed Sultan Road, given the large supply of space coming onstream in 2010.

The 0.62 ha site has a maximum gross floor area of 9,265 sq m and is being sold on a short-term lease of 15 years with a price tipped at anything from $10 million to $18 million. A block of about four storeys could be built in around a year, said the Urban Redevelopment Authority (URA) yesterday.

But Mr Nicholas Mak, Knight Frank’s director of consultancy and research, said the development period for such projects could take up to two years.

This would mean the development will be completed in 2010, just when a large supply of about four million sq ft of office space will be ready. ‘This would result in a significant amount of competition in the office property market,’ said Mr Mak.

He thinks the uncertainty will mean a cautious approach by developers with fewer than five bids likely, including the opportunistic ones. Mr Mak said the land price for the site is expected to come to between $10 million and $13 million, or from $100 to $130 per sq ft (psf) of potential gross floor area. Office rents in the Mohamed Sultan area are now going at $5 psf to $7 psf.

Mr Donald Han, managing director of Cushman & Wakefield here, is tipping higher bids of $150 psf to $180 psf. He believes there will be interest in the site as it is just outside the Central Business District.

The land is one of three commercial plots slated for sale through the confirmed list in the second half of the year. Confirmed list sites go up for tender at scheduled dates, regardless of developer interest.

When the availability of this and another transitional site was announced in June, some market watchers questioned the need for them.

Colliers International’s director of research and consultancy, Ms Tay Huey Ying, said at the time that the market was already seeing dwindling interest in such transitional sites in the wake of subdued sentiment in the economy and property market.

The URA also launched tenders for two industrial sites on the reserve list yesterday. This came after developers applied for the 60-year leasehold sites. The firm that is keen on a Kallang Pudding Road site committed to bid at $10.8 million or above while the party eyeing the Ubi Avenue 4 site will bid $21.6 million or more.
 
Source : Straits Times - 20 Aug 2008

The Urban Redevelopment Authority (URA) has launched a transitional office site at Mohamed Sultan Road for sale by public tender.

The site is one of three commercial parcels to be sold through the confirmed list under the Government Land Sales Programme for the second half of this year.

It has a land area of nearly 0.62 hectare and a maximum permissible gross floor area of about 9,200 square metres.

A low-rise development of about four storeys can be built on the site which has a lease of 15 years.

Tender for the site will close at noon on October 14.

Consultant Knight Frank expects the bids to range between S$10 million and S$13 million. This translates to S$100-S$130 per square foot per plot ratio.

Rents in the Mohamed Sultan Road area are currently hovering between S$5 and S$7 per square foot.

Separately, two other parcels on the reserve list are expected to be put up for tender.

The URA says a developer has committed to bidding at least S$10.8 million for a land site at Kallang Pudding Road.

A developer has also agreed to offer at least S$21.6 million for another site at Ubi Avenue 4. - CNA /ls

Source : Channel NewsAsia - 19 Aug 2008