Published 23 March 2011
The Business Times
By Kalpana Rashiwala
Its venture with TID places top bid of $320.86 psf ppr for the site
CITY Developments Ltd (CDL) yesterday set a record price – albeit just by a whisker – for executive condominium (EC) land.
The seasoned developer’s bid for the 99-year leasehold plot at Choa Chu Kang Drive has been seen as defending the pricing for an upcoming EC project that it will launch in a few months on a plot that it had clinched last December.
At yesterday’s tender, a joint venture between CDL and TID placed the top bid of $170.1 million or $320.86 per square foot per plot ratio.
This was marginally higher than the previous high of $320.58 psf ppr that a United Engineers-led partnership paid for an EC plot in Sengkang East Avenue and Buangkok Drive last May. This is being developed into the Austville Residences project.
The CDL-TID bid for the Choa Chu Kang plot is higher than the estimates given by property consultants when the site was launched in January – $220-280 psf ppr. Nonetheless, some analysts were not altogether surprised by CDL’s bullish bid.
In December, CDL clinched an EC site at Segar Road, near Segar LRT Station and facing Kranji Expressway, at $270.51 psf ppr. The land parcel tendered yesterday is about 2.2 km away, in a more choice location closer to Choa Chu Kang MRT Station and Lot 1 mall.
‘Basically, they could not afford to have someone bid lower for a better site than what they had paid for their Segar Road site. It makes sense for them to try and defend prices in the area,’ said a developer.
CDL is planning to develop a 602-unit project on the Segar Road plot which it expects to launch around the middle of this year.
Yesterday evening, a CDL spokeswoman said that the scheme for the latest Choa Chu Kang plot involves a project of up to 20 storeys with about 460-470 units. She also highlighted the group’s familiarity with the location, having developed Lot 1 and Guilin View condo.
‘CDL . . . is well placed to maximise the potential of the site . . . We are confident that there will be strong demand from young families and upgraders for this well-positioned EC site.’
This will be the CDL group’s fifth EC project.
ECs are a hybrid of public and private housing with initial buyer eligibility and resale restrictions, which are completely lifted 10 years after an EC project has been completed.
The CDL-TID bid was nearly 7 per cent higher than the next highest bid of about $300 psf ppr, from a tie-up between Frasers Centrepoint and Keong Hong Construction.
The other bidders were Qingdao Construction (Singapore), $289.92 psf ppr; Mequity (Hillview), whose shareholders include Roxy-Pacific and Macly Capital, $261.82 psf ppr; Wee Hur Development, $225.60 psf ppr; and Mezzo Development, $221 psf ppr.
CBRE Research executive director Li Hiaw Ho estimates CDL-TID’s break-even cost at about $650 psf. ‘In January-February 2011, units in Mi Casa (a 99-year leasehold private condo next door) were sold at around $800 psf. It is likely that the new EC project can fetch around $700 psf on average, a differential from the price of private condominiums to take into consideration the eligibility conditions attached to EC.’
Cushman & Wakefield senior manager for Asia-Pacific research Ong Kah Seng said: ‘The optimistic price received for the Choa Chu Kang EC site is largely due to encouraging take-up of new EC projects launched in recent months. Buying interest for resale ECs is also encouraging as they’re more attractively priced than private condominiums, reflecting the attractiveness of ECs for an owner who eventually re-sells the home after fulfilling the required occupation period.’
Credo Real Estate executive director Ong Teck Hui said: ‘Since EC prices take reference from private residential prices, bidders must be optimistic that the private residential market would hold or even strengthen going forward. If that continues, there will be that sandwich class of buyers to cater to.’