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Bid for Jurong EC plot raises the roof and breaks record

[SINGAPORE] An all-time record price for executive condominium land has been set for a plot in Jurong, an area which has been starved of new EC supply.

Posted on 31-Jul-2013
By: Kalpana Rashiwala

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Bid for Jurong EC plot raises the roof and breaks record

[SINGAPORE] An all-time record price for executive condominium land has been set for a plot in Jurong, an area which has been starved of new EC supply. Located near Jurong Country Club, the 99-year leasehold plot received a top bid of $418.53 per square foot per plot ratio (psf ppr) amid strong participation from 16 bidders. The buzz in the location, following strong sales at J Gateway condo last month, also contributed to the strong demand for the EC plot.

However, two other EC sites - both in Punggol - whose tenders also closed yesterday in a bid by the authorities to rein in bullish bids for EC land - fetched top bids of about $355 psf ppr and $356 psf ppr, just a shade above the $351 psf ppr that a plot at Punggol Field Walk/Punggol East drew in December. Analysts said this was probably because developers were mindful of a possible saturation of EC and 99-year private condo projects in the Punggol/Sengkang location.

ECs are a public-private housing hybrid with initial buyer eligibility and resale restrictions which are completely lifted 10 years after the completion of an EC project.

Some analysts said the government's attempt to have simultaneous tender closings for three EC sites does not seem to have had its desired impact of tempering tender bids, while others suggest it may be too early to declare the experiment a failure.

Besides the scarcity of new EC supply in Jurong in particular and developers' voracious appetite for residential land in general, they highlight strong underlying demand for new ECs, which cater to owner occupiers - who are not the target of many of the property cooling measures.

Also, under the Total Debt Servicing Ratio framework, a buyer wishing to upgrade from his current Housing and Development Board (HDB) flat can probably get a bigger housing loan for an EC purchase, rather than a private property; this is because the HDB monthly mortgage payment will not be factored into TDSR calculations when banks assess the amount of loan they grant to an EC buyer, notes Nicholas Mak, executive director at SLP International.

At yesterday's tender, the top bidder for the Jurong plot, located at Yuan Ching Road/Tao Ching Road, was a consortium comprising Evia Real Estate (5), BBR Development, CNH Investment and OKP Land. Its $418.53 psf ppr bid topped the previous EC land record of $392 psf ppr set for a plot in Tampines Central 7 in 2011 that is now being developed into Tampines Trilliant.

The 16 bids for the Jurong site came close to the record 19 received for the Summerdale EC site in Boon Lay Drive in May 1997, points out Mr Mak.

Property consultants estimate the breakeven cost for Evia's bid at $740-800 psf. CBRE Research associate director Desmond Sim predicts an average selling price of about $900 psf, which will set a new record for ECs. A seasoned developer estimates a lower selling price of around $840 psf.

Evia Real Estate Management's managing director, Vincent Ong, said the group plans to develop a 500-unit EC project that "promises compelling design features and lifestyle options".

"We are confident of the EC market due to the burgeoning sandwiched class and its increasingly sophisticated home taste."

The company is the real estate arm of private equity firm Evia Capital Partners.

Its bid was just 1.8 per cent higher than the next highest bid of $410.96 psf ppr by Greatview Development, controlled by Yu Zhisong. Other bidders include UOL Venture Investments, Singhaiyi, and a joint venture involving Sing Holdings, Maxdin and the Chiu family's Tang City Properties.

Also bidding were City Developments-TID, Frasers Centrepoint, EL Development, Koh Brothers, and Hoi Hup. The lowest bid - from Han Chee Juan's Teneriffe Development - was $323.37 psf ppr.

The plot at Punggol Central/Edgedale Plains drew eight bids, with a top bid of $356.14 psf ppr from a JV between Master Contract Services and Keong Hong Construction. This was 1.4 per cent more than the second highest bid by Greatview Development.

Six bids were received for a nearby waterway-fronting plot along Punggol Drive/Edgedale Plains and next to Kadaloor LRT Station. Highest bidder Peak Square - a unit of Kheong Leong - priced the site at $355.17 psf ppr, 2.5 per cent more than the next highest bidder, Kingsford Development.

Sim Lian was the lowest bidder for both Punggol plots.

Several developers went for more than one site despite the simultaneous tender closing of the three EC sites. For instance City Developments bid for all three sites as did Kingsford Development.

Frasers Centrepoint, Evia, Sing Holdings and Sim Lian were among those who bid for two sites.

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