Smaller developers are teaming up as consortiums to leverage on each other’s resources when bidding for sites amid stiff market competition, said media reports.
According to Donald Han, Managing Director at property consultancy Chestern Singapore, smaller players need to raise more funds “unlike bigger listed developers who have access to a myriad of financing facilities and sources of funds”.
For instance, the recent tender for an executive condominium (EC) site in Yuan Ching Road recorded a top bid of S$418 psf ppr, submitted by a consortium comprising Evia Real Estate, CNH Investment, BBR Development and OKP Land.
In other cases, smaller developers and construction companies only join forces after the tender is awarded. One example is Oxley Holdings’ announcement of its partnership with construction firms to develop Midtown Residences (pictured) and KAP Residences.
“If smaller developers are on their own, they can bid only at a price that the bank is willing to lend them” that reduces chances of winning tenders, said Ku Swee Yong, Chief Executive of International Property Advisor.
OrangeTee’s Research Head Christine Li noted that there were only three sites awarded to smaller players acting alone between January to July 2013, compared to seven sites over the same period last year.
At the same time, no bids over S$300 million were submitted by smaller developers acting alone.
“For land sites that are cheaper, from S$100 million to S$200 million, smaller developers usually bid on their own,” Li said.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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