A CONSORTIUM led by Frasers Centrepoint that placed the top bid of S$624.18 million, towards the high end of market expectations, for a 99-year site near East Coast Park is planning to build an 800-to-900-unit condo designed to maximise seaview-facing units.
The consortium plans to launch the project within a year. "The development, which will be targeted primarily at owner occupiers in the mid to upper segment, will overlook the East Coast Park/beach, a popular venue for ... outdoor activities and sea sports," the consortium said on Thursday evening.
Moreover, the site is a stone's throw from the future Siglap MRT Station (on the Thomson-East Coast Line); the station is slated for completion in 2023.
Frasers Centrepoint unit FCL Topaz will hold a 40 per cent stake in the consortium, while Sekisui House will also hold 40 per cent and KH Capital (a unit of Keong Hong Holdings) the remaining 20 per cent. Keong Hong is expected to provide construction services for the project.
In all, eight bids were received for the 1.9-hectare land parcel along Siglap Road near the junction with East Coast Parkway and in close proximity to the beach.
The highest bid, which translates into S$858 per square foot per plot ratio (psf ppr), was 4 per cent above the second highest offer of S$825 psf ppr from a tie-up involving units of Hong Leong Holdings, City Developments and TID Residential.
GuocoLand was in third place, with a S$801 psf ppr offer; followed by a partnership among UOL, Singapore Land and Kheng Leong, which priced the site at S$800 psf ppr.
Allgreen Properties placed the lowest bid of S$477 million or about S$656 psf ppr.
JLL national director Ong Teck Hui said the highest bid of S$858 psf ppr was at the top end of expectations and suggests a bullish outlook in demand for units in the future project on the site.
"Besides the top bidder, it appears that other bidders also shared similar optimism, as the top four bids were above S$800 psf ppr - all falling within a 7 per cent margin.
"The East Coast address, promising sea views, the amenities at East Coast Park and Katong are strong pull factors for buyers which the successful tenderer can leverage on. There are few new projects in the vicinity and certainly none having such a wide sea-view frontage," Mr Ong added.
CBRE Research Singapore and South East Asia head Desmond Sim too said the project will boast unblocked sea views in addition to enjoying quick access to East Coast eateries. "Being located in a mature estate, the site is supported by a comprehensive suite of amenities and a range of educational institutions."
Market watchers believe the top bid would translate into a breakeven cost of around S$1,320 to S$1,350 psf and the consortium could be eyeing an average selling price of around S$1,500 to S$1,600 psf.
Among existing projects, some analysts pointed to Costa del Sol as the most comparable to the latest site in terms of location. Last year, 28 units were transacted in that condo, based on data of caveats lodged, at a median price of S$1,210 psf. However, Costa del Sol was completed in 2004 and is on a site with 81 years' balance lease.
While the Frasers Centrepoint consortium would require favourable market conditions for a successful launch of their project and will also be hoping for some easing of the property cooling measures by the time the project is released, an already existing strong plus-point in their favour is that so far, there is no "supply fatigue" in the area - unlike other locations where the government has released a string of sites in the past five years.
SLP International executive director Nicholas Mak said: "As there is almost no new private condo development in the locale, the project on the site just tendered will not have to face keen competition."
Ong Kah Seng, director at R'ST Research, described the eight bids at Thursday's tender as a good showing considering the big ticket size of the development.
"Although there are many potential collective sale sites in the East Coast, most developers would find the acquisition process too long and uncertain. Buying a site at a state tender is more time-efficient. Developers remain hungry for land."
The tender for the Siglap Road site was conducted by Urban Redevelopment Authority.
This article was first published on January 15, 2016.
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