The top bid submitted for an executive condominium (EC) site in Sengkang was the lowest offered for an EC site since July 2011, according to consultants quoted in the media.
Reflecting the cautious mood among developers, the $157.8 million bid by Sim Lian Group was accepted by HDB last Thursday, potentially pricing the new project well below nearby EC developments and heating up competition among buyers.
Market watchers highlighted that the results of the tender were released 12 working days after the bidding exercise closed, which was a departure from the usual practice of five days.
SLP International Executive Director Nicholas Mak reckons the reserve price for the 1.75ha site, which was kept confidential, may have been adjusted to reflect the bidders’ assessment of the site’s value.
However, the housing board explained that it is not “solely based on the tender price meeting the reserve bid price for state land”. It noted that factors such as compliance with tender specifications are also taken into consideration.
The Sim Lian project is expected to have a break-even price of between $600 and $660 psf, giving the developer enough room to “undercut” selling prices of nearby developments.
Sim Lian’s $157.8 million bid, which translates to $280 psf ppr, is 24 percent lower compared to the $367 psf ppr paid by SingHaiyi for a neighbouring site, which will house The Vales EC. It is also 18 percent lower than the $331 psf ppr paid by Qingjian Realty for its Bellewaters EC site.
“If EC buyers think that a nearby new project could come onto the market at lower prices, they might prefer to wait… This could slow the sales of other EC projects that are being actively marketed,” said Ong Teck Hui, National Director of Research and Consultancy at JLL.
Meanwhile, Mak noted that the Sengkang tender could be a signal of more bids dropping below the $300 psf ppr mark.
Image source: HDB
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
