Condo site near Lakeside station attracts 12 bids

MCL's top bid would have been even higher if not for cooling move: CEO

The Straits Times

January 30, 2013

A 99-year private condo plot about 450 metres from the Lakeside MRT station attracted 12 bids yesterday, in an indication that developers' interest in prime suburban sites may not have been curbed by the round of property-cooling measures unveiled this month.

However, industry players and market watchers offered mixed readings of MCL Land's top bid of $651.33 per square foot per plot ratio (psf ppr), which was 3.3 per cent above the second highest bid of $630.57 psf ppr from the UOL Group. The top six bids were within a 10 per cent range.

Some property consultants said MCL's bid exceeded their expectations; in November, when the site was launched, they had forecast that the winning bid would come in at up to $600 psf ppr.

For one consultant at least - Jones Lang LaSalle's national director Ong Teck Hui - MCL's bid came in at the mid-point of his November forecast of $630 to $680 psf ppr.

Even then, he commented that "the tender result shows that market confidence has not been dented by the latest cooling measures, effective Jan 12 - at least for the higher bidders".

Some developers said yesterday's top bid would have been even higher if not for the cooling measures.

SLP International executive director Nicholas Mak said: "Based on the relatively high number of bids and high land prices submitted in today's tender, some developers do not expect private residential property prices to fall in the next one year or so, despite the latest severe market cooling measures."

The site, bounded by Jurong West Street 41 and Boon Lay Way, is next to the Canadian International School; it is also adjacent to another condo plot available for application under the government's reserve list.

Koh Teck Chuan, chief executive of MCL Land, told BT that if not for the latest cooling package, the group's bid would have been higher - probably $710 to $720 psf ppr.

In May last year, MCL paid $705 psf ppr for a condo plot near Jurong East MRT station, where it is developing a 738-unit project; this is expected to be launch-ready by mid-year.

Suburban residential land prices have moved up since last May, Mr Koh pointed out. Moreover, the Jurong East location, where a new commercial hub is coming up, offers more "positive attributes" than the area around Lakeside MRT station two stops away. He noted, however, that the Lakeside plot would have a plus in the form of unobstructed views of Jurong Lake.

"We bid lower for the Lakeside land parcel than we would have if there had been no cooling measures because, No 1, we'll have to factor in a slower pace of sales and, No 2, we'll have to pay development charges for the private enclosed space and roof terrace."

Mr Koh agreed with some property consultants' suggestion that, based on its $651 psf ppr bid yesterday, MCL could break even at about $1,050 psf and look at posting an average selling price of around $1,300 psf.

ERA Realty Network's key executive officer Eugene Lim said that units in Lakefront Residences nearby are changing hands in the subsale market at between $1,100 and $1,300 psf.

Savills Singapore research head Alan Cheong said: "Perhaps the presence of the Canadian International School next door could be a strong selling point for this project ... Nevertheless, the participation of 12 bidders for the first pure residential site at a state tender post ABSD 2 is a strong testament that developers still have unshakeable faith in the residential market."

He was referring to the latest raft of cooling measures, in which additional buyer's stamp duty (ABSD) rates were raised to curb residential property investment and foreign buying.

Mr Cheong suggested: "Moving ahead, sentiment and developers' appetite for land could improve further, after the release of the latest projected population parameters contained in the White Paper."

CBRE executive director Joseph Tan, noting that the top six bids at yesterday's tender were within a 10 per cent range, said: "This shows that developers are still on the hunt for sites with good location attributes; it also demonstrates their confidence that the market will respond positively to the project."

Analysts noted that the 12 bids at yesterday's tender were identical to the number of bids received for the Jurong East tender last May as well as the tender for a site in Ang Mo Kio Avenue 2 near the future Mayflower MRT station, which closed on Jan 8 with a top bid of $790 psf ppr.

SLP's Mr Mak described MCL's bid yesterday for the Lakeside plot as "aggressive", and designed "to ensure its market position in the Jurong area when its condo projects are launched in the near future".

Yesterday's tender was supposed to have closed on Jan 15, but the Urban Redevelopment Authority postponed it to yesterday to give developers more time to weigh the impact of the measures.

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