Published 15 April 2011
The Business Times
By Kalpana Rashiwala
Sim Lian’s offer of $392.45 psf ppr beats closest rival by 14.7%
A NEW record price has been set for executive condominium (EC) housing land.
A state tender yesterday for an EC plot at Tampines Central 7, about 800 metres from Tampines MRT Station, drew just four bids; but the highest, from Sim Lian Land, was $278.8 million or $392.45 per square foot of potential gross floor area.
This bust the recent record of $320.86 per square foot per plot ratio (psf ppr) set just last month for EC land by a City Developments and TID partnership for a plot at Choa Chu Kang Drive.
Sim Lian’s bid at yesterday’s tender for the Tampines plot was also a whopping 14.7 per cent higher than the next highest offer of $342.05 psf ppr by Quingdao Construction (Singapore).
‘This is one of the best-located EC sites ever to be released,’ said Diana Kuik, executive director of Sim Lian Group, pointing to the site’s proximity to Tampines MRT Station and the proposed Tampines Town Hub, a one-stop lifestyle destination that will include a mega community club (CC), performing arts theatre, retail shops, food and beverage outlets, a library and a bowling alley.
Sim Lian is planning to develop a 14- to 15-storey EC project on the site with about 660 apartments (comprising two- to four-bedders) slated for launch in the first quarter 2012. The majority of units are likely to be three-bedders, with typical sizes of 1,100-1,200 sq ft, Ms Kuik said.
Analysts note that the developer is no newbie to the location; it is behind two design, build and sell scheme (DBSS) public housing flat projects just a stone’s throw away from the EC plot tendered yesterday. In addition, the group is involved in the construction business, giving it a firm handle on construction costs and confidence to bid aggressively for yesterday’s EC site, suggest some analysts.
ECs are a hybrid of public and private housing with initial buyer eligibility and resale restrictions – all of which are lifted 10 years after the project’s completion.
The other two bids at yesterday’s tender came from a tie-up between Frasers Centrepoint and Keong Hong Construction ($330.79 psf ppr); and Soilbuild Group Holdings ($279.98 psf ppr).
Market watchers estimate Sim Lian’s breakeven cost could be in the $650-700 psf range and that it would have assumed an average selling price of at least $750 psf – or close to the price at which Esparina Residences, an EC project near Buangkok MRT Station, which was released around October last year.
Colliers International director of research and advisory Chia Siew Chuin said that given the uptrend in EC land prices, which would translate to higher launch prices for new EC projects under buoyant market conditions, ‘it may perhaps be timely for the government to review the EC scheme, which is intended to provide affordable housing to buyers in the sandwich class’.
She suggests mechanisms could be introduced for guide prices for both land bids as well as selling prices for the resulting EC projects – although she acknowledged difficulties in implementing such a system.
BT in a commentary last month suggested the government may wish to consider bringing back the old system of directly allocating some EC sites – at prices set by the state – to the likes of NTUC Choice Homes Co-operative with accompanying guide launch prices for the projects to be built on them.
Choice Homes has a mission of developing quality housing at affordable prices to help more Singaporeans own private property. The co-op has been absent at state tenders in recent months, including those for EC sites.
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