Tampines residential site draws developers, but bidding is cautious

SINGAPORE — A site for residential development in Tampines has drawn active participation from developers looking to replenish their land banks, but the bidding was cautious because of the relatively unattractive location and large housing supply in the area.

Located about 1.7km from Tampines town centre and MRT station, the plot of land known as Tampines Avenue 10 Parcel D garnered a total of 12 bids, with the top bid of S$227.8 million,or S$482.58 per sq ft per plot ratio (psfppr), from MCC Land, said the Urban Redevelopment Authority at the close of the tender yesterday. That is at the lower end of analysts’ expected range of S$480 to S$510 psfppr.

As the second residential site released from the Confirmed List of the Government Land Sales (GLS) programme for the first half of the year, the 99-year leasehold site sits on 168,567 sq ft and has a plot ratio of 2.8. That gives it a maximum gross floor area of 471,997 sq ft, which can yield about 490 homes.

“A healthy number of bids were received for the Tampines Avenue 10site as developers are running low on land and are looking to replenish (their land banks) … Bidders were probably spurred by the palatable, affordable total quantum,” said Mr Desmond Sim, head of property firm CBRE Research for Singapore and South-east Asia.

The highest bid is at a 7 per cent premium to the second-best bid from Allgreen Properties.

Mr Wong Xian Yang, research and consultancy manager at real estate firm OrangeTee, said MCC Land was motivated to protect its pricing power in the vicinity. A unit of Chinese state-owned enterprise Metallurgical Corporation of China, MCC Land is the developer of The Santorini, a condominium project located along the same stretch of road.

Still, MCC Land’s bid for Tampines Avenue 10 Parcel D is 14.1 per cent lower than the S$562 psfppr it paid in July two years ago for Parcel B, on which The Santorini sits.

“With the lower land price of this new subject site, it could average down its land price in this location,” said Mr Nicholas Mak, executive director of research and consultancy at property firm SLP International.

Besides the distance from the town centre, challenges facing the developer in pricing the future project include the site’s proximity to a large industrial estate, Mr Mak said. “Some investors may not be attracted to the new project on this site because of the large number of new condominium units in the vicinity. There are a total of about 3,000 units in the four condominium and one EC developments near the subject site. The units in these new condominiums may be potential competitors in the leasing market.”

He also noted that 70 per cent of the 597 units in The Santorini were still not sold as at the end of last month. The median transacted price for the units sold was about S$1,130 psf, he said.

Despite topping the latest tender, MCC Land may still be looking over its shoulders. “MCC Land would have to watch for potential competition from a nearby site, Tampines Avenue 10 Parcel C, which is still on the Reserve List,” said Mr Wong. The plot of land for Parcel C is bigger and can be developed into about 675 units.

However, the plot is not expected to hit the market soon. “We do not expect Parcel C to be triggered soon, given current supply in the vicinity and market conditions,” said Mr Wong.