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Conservative bids signal developers’ more cautious stance

SINGAPORE — Property developers may be taking a more “conservative” stance when bidding for land, said analysts after the Urban Redevelopment Authority (URA) closed the tenders for two private residential sites at Upper Serangoon View yesterday.

SINGAPORE — Property developers may be taking a more “conservative” stance when bidding for land, said analysts after the Urban Redevelopment Authority (URA) closed the tenders for two private residential sites at Upper Serangoon View yesterday.

The adjacent land parcels attracted eight bids each, with Kingsford Development, owned by Chinese nationals, coming in top for both sites at S$258.8 million and S$201.6 million. That translated to about S$522.40 per square foot per plot ratio each and more than 10 per cent higher than the next highest bids.

Analysts said that while the sites managed to attract a “healthy” number of bidders, the bids, save those of Kingsford, showed that developers were being more “price sensitive” given the current cautious climate.

“Kingsford put up two very optimistic and identical bids … though the rest of the developers have taken more cautious stances and moderated their bids. As a result, the top bids were 16 per cent and 13 per cent higher than the next highest bids (for Parcel A and Parcel B, respectively),” said Ms Christine Li, OrangeTee’s Head of Research and Consultancy.

Mr Ku Swee Yong, Chief Executive of Century 21 Singapore, also said the bids showed that developers were “generally more measured and conservative”, with the exception of the top bids.

“The highest bids still look aggressive, but the units can be launched probably around S$1,000 psf, which is not considered high for that location. If the developer can size down the units to an average of 800 sq ft, the total quantum is affordable and they can move units fast,” he added.

Buying interest in the private residential market has shifted to homes that are priced at lower absolute values, as the Total Debt Servicing Ratio Framework introduced in June indirectly limits the size of the housing loan a buyer can take, thus affecting affordability.

The two 99-year leasehold sites, released under the Confirmed List of the Government Land Sales programme, are each assigned a gross plot ratio of 3.0 and can yield a total of about 920 units, according to the URA. Parcel A sits on about 165,129 sq ft and is expected to yield 510 homes, while Parcel B has a site area of about 128,639 sq ft and can yield 410 units.

The sites were put up for sale under the batch tender closing system, where tenders for sites near each other or sharing common characteristics will close on the same day in an effort to moderate bids and future property prices.

However, some analysts said foreign developers in the local property market or new players to the scene would still put in bullish bids despite the batch tender arrangement as they seek to build up their land banks.

Ms Chia Siew Chuin, Colliers International’s Director of Research and Advisory, said: “While Kingford’s bids seem bullish amid the current buying sentiment, it indicates the developer’s intention to land bank, cement its position and minimise price competition it could potentially face in the vicinity.”

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