Top bid for Hillview Ave site beats expectations

Business Times: Wed, Mar 07
  (SINGAPORE) An ‘overly optimistic’ top bid, a whopping 18.6 per cent higher than the next, was put forth by Kingsford Development for a 99-year residential site located along Hillview Avenue yesterday. Its bid of $243.2 million or $638 per square f…

(SINGAPORE) An ‘overly optimistic’ top bid, a whopping 18.6 per cent higher than the next, was put forth by Kingsford Development for a 99-year residential site located along Hillview Avenue yesterday.

Its bid of $243.2 million or $638 per square foot per plot ratio (psf ppr) for the 136,147 sq ft plot with a plot ratio of 2.8 came even as other developers adopted a more cautious stance.

The bid may have been pegged to The Hillier’s land price of $673 psf ppr when the site was tendered in April 2011, suggested Credo Real Estate executive director Ong Teck Hui.

However, The Hillier’s land price takes into account a 15 per cent commercial element in the project, which contributed to its achieving the pricing level of its residential units, he noted.

Li Hiaw Ho, executive director, CBRE Research, agreed, noting that the success of The Hillier, also on Hillview Avenue,  could be the reason for the optimistic top bid for the site. Mr Li expects a breakeven cost of between $1,000 and $1,050 psf.

The second highest bid of $205.1 million, or $538 psf ppr, put in by Flamegold Pte Ltd, a unit of UOL Group, was more in line with analyst expectations when the site was released for tender in January.

UOL’s bid of $538 psf ppr could have resulted in a breakeven price of $900 to $950 psf, which ‘could provide the developer with some space to manoeuvre in the event of a softer market’, said Nicholas Mak, executive director of research and consultancy at SLP International.

‘The top bid for this Hillview site could result in a breakeven price of $1,010 to $1,060 psf. To yield a decent profit, the developer would have to sell the units in the development at prices above $1,200 psf,’ he added.

An ACRA search shows that Kingsford Development has three shareholders, of whom one is based in Shenyang, China.

The third highest bid came from MCL Land, at $190.5 million, or $500 psf ppr. Far East Organization’s Astor Properties and Tannery Holdings also put a joint bid with Sekisui House of $176.3 million, or $463 psf ppr. The lowest bid came from Capital Development and Qinghe, at $148.0 million, or $388 psf ppr.

‘Although the top bid is 5.1 per cent lower than the previous bid of $672.61 psf ppr submitted by Far East Organization in April 2011, we feel that the bid is a bit optimistic given that it is 18.6 per cent higher than the second bid and the previous site is a mixed use site while this is a pure residential site. We noticed that all the bids are slightly lower than the previous bids for The Hillier site which means that developers could be adopting a cautious stance,’ said Lee Sze Teck, senior manager for research and consultancy at DWG. 26 Newton VVIP PREVIEW

As evidence that the mass residential market is still buoyant, Bartley Residences, located next to Bartley MRT Station, sold 210 units out of the 240 units released to date.

Source: Business Times © Singapore Press Holdings Ltd.

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