• [D.1] En bloc sale news: Maison Royale in Newton

Owners of the 20-unit Maison Royale, a freehold residential site in Newton, are asking at least $50 million, including an estimated $300,000 development charge (DC). If the deal is successful, the collective sale price will work out to be $1,273 per square foot per plot ratio (psf ppr).

The breakeven cost will be around $1,665 psf.  The successful developer could launch the apartments in the new development at around $1,915 psf.

• [D.2] Thomson collective sale faced a ‘road block’

The collective sale of five small estates near Thomson Road is stopped by a ‘road block’, in every sense of the word. The developer, KSH Holdings, which tried to buy a 1,000sq m section of a road from the Singapore Land Authority (SLA), has found out that the price of the road is $16 million - double what it had estimated.

While waiting for the outcome of KSH Holdings’ appeal to SLA, the collective sale contract may lapse. This means that the flat owners will keep the $12 million deposit while the buyer will be left with nothing but a little more wisdom.

The five small estates include Norfolk Court, Mergui Lodge, Northern Mansion, Mergui Court and The Mergui. The collective sale deal was concluded in November 2007 for $120 million.

There have been no major new developments in this market segment in August 2008.

The soaring construction costs are cutting too deep into the developers’ profit margin. Coupled with the deteriorating market situation, developers of mass-market projects, which traditionally yield a smaller profit margin, will have to be more cautious in their land-banking strategies.  On the other hand, many big-timers have stayed out of the government land sale programme altogether.

It can be seen in recent times that small-time developers are trying their luck with opportunistic bids at URA tender, for example, in April 2008 an obscure construction/property development firm bid $61 million, or about S$1,750 per square metre per plot ratio (psm ppr), for a residential site at Ten Mile Junction at Choa Chu Kang Road/Woodlands Road; and the bid was roundly rejected by URA.

Earlier in March 2008, the top bid of $11.8 million or $$77.80 psf ppr for a landed housing plot at Westwood Avenue in Jurong West was also rejected by the URA for being too low.

It is believed that, if the current situation persists, the developers will stick to the cautious policy towards the Government Land Sale (GLS) program. 

• [F.1] URA rejected the sole bid for Tampines site

The same firm which was snubbed twice by URA this year, tried its luck again in August and put in the sole bid of $118 psf ppr for a 99-year leasehold plot at Tampines; and apparently despite the drastic change in the market climate, there was no change in the firm’s luck.

As such, it remains interesting to see whether the 1.39ha choice condominium site in Serangoon Avenue 3, next to the Lorong Chuan MRT Station will receive any bid, and if at all, the quantum of the bid price.

• [F.2] Balestier hotel plot went on the cheap

In the first week of August, the URA awarded the Balestier Road hotel site to HH properties for $73.3 million or $172.09 psf which was below analysts’ earlier estimate of $350.470 psf.

The award despite the low bid could be because the URA has taken into consideration the high construction costs, and also due to the improvement plan the government has for the Balestier road area.

• [F.3] SLA releases 8 infill sites for lease

Eight infill sites were offered by the Singapore Land Authority (SLA) for lease and the bidding was done on 28 August with a disappointing outcome. Usually, infill sites are released during a housing boom to ease the tension of low market supply.

However, the SLA seemed to have over-estimated the demand this time around. Only four of the eight sites were taken. The poor bidding result can be interpreted as a resounding pronouncement of the end of the property market boom.

Of the eight parcels, one received considerable attention. A 15,461 sq ft good class bungalow plot in Ridout Road attracted 34 bids, which drove the opening price of $7.31 million up steadily. BreadTalk chairman George Quek eventually won the site for $8.96 million or $579.50 psf - the highest psf price of the four sites sold.

So, when it comes to property investment, it always boils down to three critical attributes, i.e. location, location and nothing but location.

• [F.4] Lukewarm response expected for Mohd Sultan Road office site

The URA tender for the 0.62 ha office site at Mohamed Sultan Road is expected to receive a lukewarm response from developers due to the projection of four million sq ft of new office space to be ready in the Central Business District (CBD) by 2010.

Meanwhile, the URA also launched tenders for two industrial sites on the reserve list. This came after two developers applied to bid for the two 60-year leasehold sites. One of the firms has committed to a minimum bid of $10.8 million for the Kallang Pudding Road site; while another firm eyeing the Ubi Avenue 4 site has committed to at least $21.6 million bid.

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