Two sites in Sengkang put up for sale under the Government Land Sales (GLS) programme have received lower-than-expected bids in yet another sign of a softening private residential market.
The 178,723 sq ft Fernvale Road Parcel A received four bids, with CEL Development and Unique Residence jointly putting in the top bid of S$234.9 million, or around S$438.20 per square foot per plot ratio (psfppr), Urban Redevelopment Authority (URA) data showed after the close of tender on Thursday (Aug 7).
The consortium also submitted the highest bid for the 187,441 sq ft Fernvale Road Parcel B of S$252.1 million, or around S$448.35 psf ppr, in the other tender that also closed yesterday, URA data showed.
Both the top bids fell short of the S$450-to-S$500 psf ppr range that analysts had expected for the 99-year leasehold sites when the tenders were launched in June.
THE LRT ADVANTAGE
Even though Parcel B garnered only three offers, the bids were more competitive than those for Parcel A due to its closer proximity to Thanggam LRT Station, analysts said.
“The bids for Parcel B reflect slightly stronger competition among the participants. The highest price is 7.2 per cent higher than the second participant and 14.3 per cent higher than the third one.
The offered prices for Parcel A vary widely, demonstrating differing views by the developers,” said Ms Christine Li, head of research and consultancy at property agency OrangeTee.
The sites each have a plot ratio of 3 and together can yield about 1,100 private homes. Ms Li estimated the breakeven prices for Parcels A and B at S$886 psf and S$898 psf, respectively. This means the selling prices could start from about S$970 to S$990 psf assuming a 10 per cent profit margin, she added.
“The results suggested that for this GLS exercise, the introduced batched tender system did not prevent market players from bidding for both plots at the same time. Nevertheless, the land prices seem to have been reined in,” she said.
SOURCE – CNA